# [2016] overcharging maintenance fees



## tk666 (May 13, 2016)

Every resort needs money, to keep it tidy, current and operating.
Every year owners get their billing with increases, but they can not verify, what they pay for.

The every year increases have been about 4-6% during the last 5 years.

Isn't that far to much, when the old world has inflation rates around 0%?
The CPI (consumer price index) is representing the countries cost changes.

The HOPA from MVCI defines as part of the contract, that the weeks maintenance is related to the countries CPI.

What makes MVCI to increase 5% more than contracted?
There are not unexpectable costs in most resorts, that would allow CPI overcharging.

I don't want to be a "cashcow" for MVCI's profitability.
:deadhorse:

Within the last 5 years the maintenance fee has increased about 30% amd the costs stayed nearly equal.
*
What can we do? Cry, disagree, complain or charge back? *


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## rsackett (May 13, 2016)

I also find it frustrating.  I bought my first Marriott Timeshare in 2005, a Manor Club unit.  The maint fees were $607 that year, they are now $1261.  Unfortunately my income has not also more than doubled since then.

As an owner your options are limited.  You could become a board member at your resort and even then I fear your control would be very limited.  You can express your feelings to the current board, I am sure they hear this all the time.  Lastly you can sell your Marriott.  

I have since sold my Manor Club and only own at Harbour Point.  HP has a similar rise in Maint Fees as MC.  There are times I think about selling and going to a Timeshare with lower maint fees on Hilton Head, but so far I guess they have not gotten high enough for me to take that step.

Ray


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## ronparise (May 13, 2016)

tk666 said:


> I don't want to be a "cashcow" for MVCI's profitability.
> [/B]




Saying that you are a "cash cow" for MVCI's profitability in your discussion about high maintenance fees, implies that you think Marriott is  somehow diverting part of what you pay for maintenance  to their bottom line. 

I know there is a management fee and its probably percentage based, so if the expenses of running the resort go up so will the management fee. so no question if expenses go up so will the management fees. But Im talking about the other 90% of the budget.  

If you are saying that some of the budget goes directly to Marriotts bottom line, thats a serious charge, and not to be made lightly

but if all you want to say is that fees are too high, I think you should go to the budget and suggest specific items that you think can be cut without impacting the "Marriott" experience that most owners demand. 

I dont own Marriott but I do get a lot of maintenance fee bills every year and they typically go up 4% or 5% too, so I feel your pain. but when I look at the budgets I see very little that the manager has any control of.. Things like electric service, water sewer, cable, taxes, insurance laundry. are pretty much just bills that have to be paid. and then there are the reserves, I know at my own home I wont replace the roof on any kind of schedule, Ill wait for it to start leaking, and I dont maintain a reserve fund for that eventual expense... Ill deal with it when it happens.  Timeshares cant get away with that approach, we have to project future expenses and we have to have reserves, My point is  we cant cut there either. 

There is very little in a timeshare budget that can be cut.. If you see something you owe it to your fellow owners to share that information and if you say your manager is stealing from the owners (ie making you a cash cow)  you should be able to prove that.


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## Saintsfanfl (May 13, 2016)

tk666 said:


> Every year owners get their billing with increases, but they can not verify, what they pay for.



Can't you look at the budget to verify what you are paying for?

Most timeshare maintenance fees are way too low in the beginning. Reserves are horribly underfunded. Nobody wants to buy a "new" timeshare and then also help pay to replace the big expensive items that last 10-25 years. This causes the fees to be too high in the later years to make up for it. These unnaturally high fees lead to defaults and bad debt which compounds the problem.

All timeshares should be forced to properly fund reserves from the beginning.


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## Passepartout (May 13, 2016)

I think that the ever- increasing MFs, above the rate most owner's incomes are increasing, explained in no small measure by defaults, and other bad debt as well as the aging of the owner base, explains the rise in the $1 timeshare resale market.  People are seeing their MFs and exchange and use fees go up, and up, while their incomes are steady to down-especially as they retire. Add to that, the need for those comfortable, spacious 2- bedroom and bigger units declines. 

As we age, a simple hotel room, with good restaurants nearby, at lower cost is more attractive than timeshares. That's just how it is.

Jim


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## JIMinNC (May 13, 2016)

tk666 said:


> The every year increases have been about 4-6% during the last 5 years.
> 
> Isn't that far to much, when the old world has inflation rates around 0%?
> The CPI (consumer price index) is representing the countries cost changes.
> ...



HOA maintenance fees go up because costs do go up. Maintenance fees are a direct return of operating costs. The HOA's are not-for-profit organizations.

Over the last five years, the U.S. CPI has increased at an average rate of about 1.8% annually. But the CPI is only a measure of overall inflation. Within that, some categories go up more than average, while others go down. Gasoline/natural gas costs have actually been going down, so that means that, excluding energy items like that, the other CPI categories are rising at a rate greater than 1.8%.

At my home resort, the single largest line item ($2.5 million) in the budget is Housekeeping, and that is largely labor-driven. From 2015 to 2016 that category increased 4.8%. While wages aren't going up that much every year, I'm sure many/most of those employees have healthcare benefits with their job, and rising healthcare insurance costs are one of the biggest drivers of increased labor costs. Those costs have been rising well above the rate of inflation overall. 

Another large budget item is Property Taxes, which increased 5.7% from 2015 to 2016 at my home resort. Those taxes are determined by the local taxing authorities and really aren't negotiable.

So the point is, just because the CPI goes up only 2%, it doesn't mean that specific costs can't go up a lot more than that. And since very little of the operating expenses of a resort are tied to the cost of fuel, our resort benefits very little from the drops in that component of the CPI. (Natural gas costs at our home resort fell by 32.2%, but only represent $65,000 of an almost $12 million budget)


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## JIMinNC (May 13, 2016)

Passepartout said:


> I think that the ever- increasing MFs, above the rate most owner's incomes are increasing, explained in no small measure by defaults, and other bad debt as well as the aging of the owner base, explains the rise in the $1 timeshare resale market.  People are seeing their MFs and exchange and use fees go up, and up, while their incomes are steady to down-especially as they retire. Add to that, the need for those comfortable, spacious 2- bedroom and bigger units declines.
> 
> As we age, a simple hotel room, with good restaurants nearby, at lower cost is more attractive than timeshares. That's just how it is.
> 
> Jim



At my home resort, bad debt expense only represents about $39,000 of an almost $12 million budget - and the bad debt line item actually dropped almost 36% from the 2015 budget to 2016. From 2014 to 2015 it also dropped 35%. Bad debt expense was $95,000 in the 2014 budget, but only $39,000 in the 2016 budget. So bad debts do not appear to be a major driver of maintenance fee increases. 

As I noted in my other post above, the line items with some of the largest percentage increases from 2015 are those that are heavily labor dependent - Housekeeping, Accounting, Administration, Front Desk, Human Resources, and Owner Services. While wages as a whole are not rising much above the background inflation rate, other employment costs such as healthcare insurance have been rising much more rapidly over the last decade or so. Since much of the expense base of a resort is from labor costs, I suspect that is the driver of most of the increases we are seeing.


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## Big Matt (May 13, 2016)

I'll respond to the Manor Club postings.

In 2006 the resort had two sections and the furnishings were just okay.  Beautiful resort with a Colonial/Historic feel.  It never had the best pools or kids club areas in comparison to the Florida resorts.

Today we have all granite counters, stainless steel appliances, new flooring, new fixtures, and upgraded furniture in the Sequel side.

We have a media room, a new colonial room, and outdoor patio with fire pits and many other things.

This year will be the opening of a new market place including a bistro, a brand new fitness center, and new  business center area.

Progress costs money.  I think the advent of resorts like Surfwatch, Oceanwatch, Crystal Shores and others upped the ante for many traditional resorts like Manor Club, Grande Ocean, and Ocean Point.


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## Jason245 (May 13, 2016)

tk666 said:


> Every resort needs money, to keep it tidy, current and operating.
> Every year owners get their billing with increases, but they can not verify, what they pay for.
> 
> The every year increases have been about 4-6% during the last 5 years.
> ...



Anually you should receive an audit report from a CPA firm which will give you a detailed review of where the money went, how the reserved look etc.


One of the expectations every owner of a TS should have is that MF will increase at a rate higher than inflation. It is a risk you are accepting when you buy . That being said, it is your right as an owner to go to board meetings and ask questions about the budget and where you money goes. 

Generally, if your MF are going up that much, this maybe a good thing since it means that that HOA is activly funding reserves appropriatly to keep you from getting hit with a special assessment later on.


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## tschwa2 (May 13, 2016)

That's why some say they would never own anything other than an independent resort with an independent HOA who hires a management company and supplies the resort based on the best interest of the owners.

Some say having the hotel type management companies that control the boards and make the budget is a conflict of interest. They have their own interests ahead of those of the owners.


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## l0410z (May 13, 2016)

In 1996 I purchased 2  2 BR resales, the Monarch and Resortworld of Orlando.  They were both rated 5 star by II.  The Monarch cost me 12K, Resortworld 3K.  The MF on both were around 450.  The Monarch's MF  is now 1385 and Resortworld's is   about 700.   Resortworld  has changed management 3 times (now called Legacy).  Legacy  has no ranking in II or RCI.   I used to be able to trade Resortworld for Marriott 2 BR's  with no problem (I only travel when school is out since my wife works in a school). It now trades for a Marriott studio when school is out.  I have actually never stayed there.    I gave it away last year.  

 I have posted at times that I believe the Monarch HOA has done good job managing the budget while still providing the Marriott experience.   This statement is in part the trade value of the resorts over time and the reviews from various sources. The Monarch HOA has always been very transparent with a liaison in place to give you access to them.  I give this detail because this year we had a 15% increase of which maybe 12% (150)  was due to a few major projects to get done.  The HOA could have done it as a special assessment but it would have been 4 times the $150 added to the reserve fee and decided against it.  I am sure they took a lot of heat for this so this year they posted a Monarch Maintenance Fee Comparison chart that goes back to 1984.  Now that I have more than just a feel, I still feel the HOA is doing a good job.  This being said, I own summer HHI.  I am not sure I would feel the same owning Dec, Jan and Feb when the vacation experience is a different.   

I am going to look at from 1996 on.  The operating fee has gone  from 331 to 824.  The reserve fee has gone from 80 to 454 (included is the 454 is the 150 increase this year).    The  Prop tax has gone from 38 to 106.    There was a special assessment in 2000 of 300 and in 2005 of 200.   

The last seven years (2010 to 2016) the increases has been 2.65, 2.46, 3.27, 2.42, 4.8, 3.53 and 15.25.  The average over the 20 years is about 5% a year. 

Just as side.. in 1984... Op fee 169, Reserve fee 25 and Prop tax 20 and  they also had a cleaning fee of 50.  I am not sure if they had  every day cleaning but that fee seems to have been folded into the operating fee in 1994.

Last point... the Management Fee (I have to assume this is MVCI) went from 109 in 2015 to 127 in 2016.. a 16.5% increase.  This seems out of wack.  I guess we are increasing shareholder value.

Overall, I believe I am getting good value from my MF


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## rickandcindy23 (May 13, 2016)

There is definitely big money in managing timeshares for the big hotel companies.  What other reason is there for the hotel companies to get involved?  Profit is the main reason.  

All of the commercials on TV from companies like Timeshare Exit Team (gag) have great appeal to disillusioned owners who see the fees going up exponentially.  

The great thing about Marriott is the value in the underlying deed.  Compare a prime summer week at Ocean Watch (Myrtle Beach) with Sheraton Broadway Plantation.  Very different values.  Sheraton doesn't have any value.  People are giving them away everywhere, and the only time I take them is when I can get free use for the current year.  

I love Sheraton's Broadway Plantation and keep hoping the value will increase.


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## darius (May 13, 2016)

Personally,  I think these increases are reasonable given what it costs to operate businesses increase annually.   Just think about it:  health care, employee wages, contractors raising prices, property taxes, etc.    

While it's frustrating, as a business owner we see the same increases and eventually something has to give.   As timeshare owners, we see the increases directly - and as hotel renters we will eventually see it as well (or they will cut other services, to make up for the loss of margins...etc).

Just my 2 cents...


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## Saintsfanfl (May 13, 2016)

darius said:


> Personally,  I think these increases are reasonable given what it costs to operate businesses increase annually.   Just think about it:  health care, employee wages, contractors raising prices, property taxes, etc.
> 
> While it's frustrating, as a business owner we see the same increases and eventually something has to give.   As timeshare owners, we see the increases directly - and as hotel renters we will eventually see it as well (or they will cut other services, to make up for the loss of margins...etc).
> 
> Just my 2 cents...



Perhaps in the short term but in the long run overall there is no escaping inflation. You cannot consistently have business expenses rising double or triple the amount of inflation for 50 years. It isn't economically possible.

There is nothing magic about the timeshare or hotel industry that causes it to have abnormal rises in true costs versus other businesses (hotel prices are not rising at the rate of timeshare fees).


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## dioxide45 (May 13, 2016)

JIMinNC said:


> HOA maintenance fees go up because costs do go up. Maintenance fees are a direct return of operating costs. The HOA's are not-for-profit organizations.
> 
> Over the last five years, the U.S. CPI has increased at an average rate of about 1.8% annually. But the CPI is only a measure of overall inflation. Within that, some categories go up more than average, while others go down. Gasoline/natural gas costs have actually been going down, so that means that, excluding energy items like that, the other CPI categories are rising at a rate greater than 1.8%.
> 
> ...



I think this is it exactly. The costs to run a timeshare are going up at a different rate than other things. It is far different than the over all inflation rate.



JIMinNC said:


> At my home resort, bad debt expense only represents about $39,000 of an almost $12 million budget - and the bad debt line item actually dropped almost 36% from the 2015 budget to 2016. From 2014 to 2015 it also dropped 35%. Bad debt expense was $95,000 in the 2014 budget, but only $39,000 in the 2016 budget. So bad debts do not appear to be a major driver of maintenance fee increases.
> 
> As I noted in my other post above, the line items with some of the largest percentage increases from 2015 are those that are heavily labor dependent - Housekeeping, Accounting, Administration, Front Desk, Human Resources, and Owner Services. While wages as a whole are not rising much above the background inflation rate, other employment costs such as healthcare insurance have been rising much more rapidly over the last decade or so. Since much of the expense base of a resort is from labor costs, I suspect that is the driver of most of the increases we are seeing.



I do remember some very big increases during the peak of the Great Recession. I think the big timeshare companies probably managed this better than the smaller independents.

I recall some of the biggest increases for Marriott properties is for housekeeping and front desk. I think a lot of this is attributed to the DC program. Someone has to pay the added costs associated with short stays from legacy week owners converting to DC points. There are also increases in costs of labor with regard to health care. Those costs are up far more than inflation.


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## rickandcindy23 (May 13, 2016)

Many years ago, we had free television and paid $16.65 with taxes for our telephone.  I loved those days.  Now we pay for cell phones, internet and cable/satellite television, all of which have a hefty price tag.  More and more owners are requiring high-speed internet to stream their television shows (me included).  That costs money, and I think that is part of what we are seeing in our maintenance fee bills.  The maids also get paid more than they used to because minimum wage requirements have escalated.


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## Saintsfanfl (May 13, 2016)

dioxide45 said:


> I think this is it exactly. The costs to run a timeshare are going up at a different rate than other things. It is far different than the over all inflation rate.
> 
> 
> 
> ...



I don't buy it. If healthcare goes up it goes up for all companies, not just hotels and timeshares. If labor goes up, it goes up everywhere. The cost to fix a roof? It's the same for any expense type. You can explain a few anomalies here are there but enough to cover a 10% increase when inflation was 0%? It's not happening.


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## Saintsfanfl (May 13, 2016)

rickandcindy23 said:


> Many years ago, we had free television and paid $16.65 with taxes for our telephone.  I loved those days.  Now we pay for cell phones, internet and cable/satellite television, all of which have a hefty price tag.  More and more owners and requiring high-speed internet to stream their television shows (me included).  That costs money, and I think that is part of what we are seeing in our maintenance fee bills.  The maids also get paid more than they used to because minimum wage requirements have escalated.



Yeah but you can take a resort that already had all that stuff for the last 10 years and they may have still gone up 10% from the previous year.

TV is still free but nobody wants the free option anymore


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## rsackett (May 13, 2016)

I certainly do not have the data, but it would be interesting to compare what the going rate for the same rooms were through the Marriott hotel sight from 10 years ago vs the maintenance fees from ten years ago.  My sense is the maintenance fees have risen faster than the rotel rates for the same rooms.

Ray


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## JIMinNC (May 13, 2016)

Saintsfanfl said:


> I don't buy it. If healthcare goes up it goes up for all companies, not just hotels and timeshares. If labor goes up, it goes up everywhere. The cost to fix a roof? It's the same for any expense type. You can explain a few anomalies here are there but enough to cover a 10% increase when inflation was 0%? It's not happening.



First off, inflation is not 0% overall - closer to 1.5% to 2% based on the standard CPI. Second, most businesses - not just hotels and timeshares - will tell you that their labor costs are going up significantly (despite what the overall CPI says) due to benefits costs - mainly healthcare - over the last 10 years or more. So businesses in which labor costs are a major component of total costs will always have costs that go up a greater % than the overall CPI.

Another factor that may be in play here is that for-profit businesses, which make up the majority of the commerce in the country and whose prices impact the CPI the most, probably have to be more focused on cost containment than a not-for-profit timeshare HOA. The HOA can just increase the maintenance fee without really worrying about the impact that the increase will have on their sales. A for-profit business, by contrast, can't respond to every cost increase with a price increase - they have to consider competition and what impact a price increase might have on the demand for their product or service. As a result, since competition and demand limits their ability to raise prices with impunity, they have to be willing to accept smaller margins or be more focused on cost control. They may even have to reduce services or otherwise cut unprofitable activities to keep their prices in line with the market. In a timeshare, particularly a "branded" timeshare like a Marriott, guests want the quality and amenities to stay at the levels they expect, so cost containment may not be as high of a management priority than at the for-profit businesses that drive 99% of the CPI. So prices charged by for-profit businesses have an additional market dynamic that helps keep the increases lower. HOA maintenance fees are not constrained by these same forces.


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## dougp26364 (May 14, 2016)

tk666 said:


> Every resort needs money, to keep it tidy, current and operating.
> Every year owners get their billing with increases, but they can not verify, what they pay for.
> 
> The every year increases have been about 4-6% during the last 5 years.
> ...



We've owned several timeshares, most increase MF's 3-5%/year. We bought our first timeshare in 1998 with MF's less than $500/year on a 2 bedroom unit. When we got rid of it last year, those MF's were closer to $1,300. So they essentially tripled in less than 20 years. 

We own 2 timeshares who's management company have managed MF increases reasonably, Hilton and Spinnaker. Hilton has quality closer to Marriott. Spinnaker is a middle of the road but comfortable timeshare. We own another timeshare in Breckenridge and, for the most part, they've kept fee's reasonable considering the high tax base and cost base for the area. 

Of the 5 timeshares we continue to own, Marriott is the company that will be on the cutting block first. 4-5% yearly MF increases will put them out of our affordable range sooner rather than later. 

Cash cow? Not really. Marriott just pays high dollar to it's contractors and puts to much into it's amenities/grounds. They're beautiful resorts but very expensive to maintain. One of ours keeps adding amenities which require additional upkeep. When I pointed out that the fee's climb to fast and adding additional amenities contribute to that problem, you'd have thought I'd kicked a hornets nest. That told me all I needed to know about which direction Marriott was going and, that I'd eventually be looking to unload our Marriott timeshares regardless of how much we've enjoyed them over the years.


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## JIMinNC (May 14, 2016)

dougp26364 said:


> Cash cow? Not really. Marriott just pays high dollar to it's contractors and puts to much into it's amenities/grounds. They're beautiful resorts but very expensive to maintain. One of ours keeps adding amenities which require additional upkeep. When I pointed out that the fee's climb to fast and adding additional amenities contribute to that problem, you'd have thought I'd kicked a hornets nest. That told me all I needed to know about which direction Marriott was going and, that I'd eventually be looking to unload our Marriott timeshares regardless of how much we've enjoyed them over the years.



Doug's excellent post highlights another factor that probably impacts the Marriott maintenance fee increases - generally premium-priced products and services in most/all sectors of the economy tend to increase at faster rates over time than the overall market, except in periods of severe economic distress, when premium items can be impacted more severely. 

Marriott is a premium timeshare product, and as Doug identifies, they try to maintain their resorts in absolute top shape and continually attempt to enhance and improve amenities. Honestly, that's what attracted us to Marriott in the first place, so we don't mind the increases as long as they keep the resorts at the level that we've come to expect from Marriott, and the increases don't get totally out of hand. I would rather accept 4%-5% average increases and have a tip-top resort that is always striving to improve services, than a resort that puts cost control as the top priority, with amenities and quality taking a back seat.

I'll say this, at Barony, our maintenance fee increase was 3.5% from 2014 to 2015 and was 3.5% again from 2015 to 2016. Too me, that is very reasonable for a quality, premium resort in a top location. 

What was infuriating was our previous ownership at Diamond's Kaanapali Beach Club. Our 2BR maintenance fees were $1276 in 2008, Diamond's first full year of management at the resort, and would have been $2090 in 2015 had we not sold. That's an average annual increase of 7.3% per year over that seven year period. What was even more infuriating, is those increases were heavily impacted by two categories - "Indirect Corporate Administrative Fees" and "Management Fees." I think these expenses went direct to Diamond as property manager.  

The "Management Fee" went from $964,768 in 2008 to $4,120,863 in 2015, an average increase of 23% per year!

2008-2009: +142.2%
2009-2010: +  21.3%
2010-2011: +  16.8%
2011-2012: +    2.8%
2012-2013: +    4.8%
2013-2014: +  11.1%
2014-2015: +    4.3%

"Indirect Corporate Administrative Fees" didn't even exist as an expense item in 2008, but after the Diamond takeover of the resort, this item was added at $2.8 million in 2009 with a one time Offsetting "Waiver" of $1.6 million, for a net expense increase of over $1.2 million. By 2015, that line item had increased to $3,897,056 - after being $0 in 2008:

2009-2010:  -    1.5% (but with the loss of the $1.6 million 2009 "waiver," the real increase was +116%)
2010-2011: +    4.1%
2011-2012: +      0%
2012-2013: +    2.8%
2013-2014: +  29.2%
2014-2015: +    1.7%

So if you want to talk about cash cows, at Kaanapali Beach Club in 2015, $8 million of a $30.5 million dollar budget (26%) appeared to be dollars that went straight to Diamond's top line revenue. The Management Fee alone was 14% of the budget. By contrast, at Marriott's Barony Beach Club, the Management Fee accounts for only about 9% of the total budget. I cannot find a corresponding Barony budget item for Diamond's "Indirect Corporate Administrative Fees."

That is why I love my Marriott!!


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## dougp26364 (May 14, 2016)

JIMinNC said:


> Doug's excellent post highlights another factor that probably impacts the Marriott maintenance fee increases - generally premium-priced products and services in most/all sectors of the economy tend to increase at faster rates over time than the overall market, except in periods of severe economic distress, when premium items can be impacted more severely.
> 
> Marriott is a premium timeshare product, and as Doug identifies, they try to maintain their resorts in absolute top shape and continually attempt to enhance and improve amenities. Honestly, that's what attracted us to Marriott in the first place, so we don't mind the increases as long as they keep the resorts at the level that we've come to expect from Marriott, and the increases don't get totally out of hand. I would rather accept 4%-5% average increases and have a tip-top resort that is always striving to improve services, than a resort that puts cost control as the top priority, with amenities and quality taking a back seat.
> 
> ...



And DRI was the second timeshare to go and the first to go due to unrealistic MF's for the product. The first was a low cost but good exchanger we just didn't need. 

Marriott is expensive but it's the product that's expensive, not just the management. With outfits like DRI it's the management that's expensive, not just the product. To that end we were feeling like we actually were cash cows for DRI.


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## wuv pooh (May 14, 2016)

GMs that I have spoken to say the biggest cost is labor, especially housekeeping.  It is not possible to hire people in resort areas that are willing to work for $8 an hour.  Raising that to $10 is a 25% increase, about 10 years of "normal" inflation.  Raising it to $12 or $15...

Most of the staff on Hilton Head comes from off island as much as an hour+ away where they can afford to live.  Staff in Orlando are interns in the hospitality program at UCF, etc.

Hard to find low wage people for hard work in expensive resort COL areas.


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## dioxide45 (May 14, 2016)

I think the higher fees in general at Marriott properties can account for the special agreements that MVCI has with exclusive vendors and suppliers. Also consider that many boards use Marriott Renovation Services (or something like that) to be the general contractor for renovations. SO they get a premium there. That doesn't account for higher increases though, if they have always had those agreements and arrangements, the costs would have always been high (which they were).


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## JimC (May 14, 2016)

Marriott is a well run high end brand.  Their properties are well maintained and updated regularly (more frequently the most competitors, which is why they get my business).

Their assosiates are top notch and provide excellent service.  Again, a reason they get my business.

Marriott provides end to end management with controls to ensure compliance.  Properties are de-flagged if they do not adhere to Marriott standards and guest satisfaction is not maintained to their contractual levels.  Their timeshares probably exist in the same environment.

Labor costs (wages and benefits) are usually the largest component of the budget.  The market for good staff is tight here in Florida and likely drives up those costs more than a broader market.  Personally, I am ok with that.  Fair wages and benefits make for happier more engaged employees and reduces turnover.

Some of our resorts, like Cypress Harbour, are getting older, thus have higher operating costs (aging, less efficient infrastructure) and higher reserves as roofs, siding, windows, insulation, lighting, technology upgrades, roads, parking lots, furnishings, kitchens and baths are renovated/replaced.  The reserves increase to reflect current useful life experience and costs for those items.

My 2 cents.  Looking back at the length, maybe a bit more like 25 cents


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## gwspops (May 14, 2016)

*The CPI is MAI*

We own several timeshares where every penny is accounted for, and those Resorts still need to raise Maint Fees about 4-5% every year.   They are lean, mean and frugal with their annual budgets.

[Political discourse removed.]


********************

Don't forget to vote  -- every where you can & every time you can.


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## tugatlast (May 14, 2016)

*It all makes sense*

First think compounded interest. Then apply that principal to your rising costs. Then figure out what you will really be paying 10 years from now. Then add in that it is quite difficult to sell your TS now, what will it be like then. Then ask if any of current board members also work for the managing team. Then answer the question why most people will not serve on the board. Add it all up and then think Ponzi.


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## TimMikel (May 14, 2016)

*It's not a problem everywhere*

At one of the resorts I own, the maintenance fee is lower now that it was 5 years ago (Lake Forest Resort & Club).  At another, I believe the fee has increased only a total of about 16% in the 8 years that I have owned it (Windward Passage Resort).  One has very little bad debt and the other is close to 10% delinquencies.  However, both operate very effective and I am extremely happy with the improvements made over the last 5 years at each resort.  There have not been any special assessments and reserves are strong.  

Both are small legacy resorts with owner controlled boards consisting of only owners.  One has its own manager and the other is managed my VRI.  I think this shows that strong management and owner engagement can make a huge difference.


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## T-Dot-Traveller (May 14, 2016)

*PLEASE SUPPORT with FACTS - since this is pure allegation*



tugatlast said:


> First think compounded interest. Then apply that principal to your rising costs. Then figure out what you will really be paying 10 years from now. Then add in that it is quite difficult to sell your TS now, what will it be like then. Then ask if any of current board members also work for the managing team. Then answer the question why most people will not serve on the board. Add it all up and then think Ponzi.



****
Dear Tugatlast ,
where are your facts ? 

Please be more forthcoming - and factual.

The word Ponzi has a specific definition and history and legacy 
tied to an individual in the early 20th century .

How does the definition of Ponzi tie into the MF increases discussed in this thread ? 

.


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## Brerrabbit (May 14, 2016)

*This is why I think time shares are not a good idea*

Yeah, they have their justifiable reasons for the maintenance fees going up every year, but if your income does not go up accordingly, then their reasons and excuses don't really do you any good.  They wonder why there is a lot of bad debt, etc. on these things?  Well, duh.  

And I bet that according to the way most of these bylaws, etc., are written, there is _*no limit*_ to how much they can raise them, and you are stuck with it whether you agree to it or not.  Yeah, you can get on the board of directors (maybe).  So what?  You will still be stuck with it.

I am one of the people who got caught up in this a few years ago and eventually got foreclosed on.  I was out of work and there was nothing I could do.  What the hell do they expect?  

If I was giving anybody advice about a time share, I would tell them to never even think about buying one unless it was iron-clad written into the contract how much the maintenance fees were, and if they tried to raise them and you thought it was too much for you, then you had the right to sell the whole time-share back to the organization for the original price you paid for it, i.e. get a 100% refund.  Of course, none of them would ever do that.  

I would just tell people that if you think you want to go spend a week at one of these resorts, just call them up and tell them you want to rent a week and ask how much it would cost you.  And if you think it is reasonable, then go there, pay them the week's rent, and when your time is up, you just hand them the keys back, thank them, and leave, and you are done with it.  No more of these constant hassles including yearly maintenance fees.


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## BocaBoy (May 15, 2016)

With all due respect, these justifications for the continual maintenance fee increases are absolute poppycock.  Note that I am talking about the increases, not the absolute levels.  Absolute levels vary greatly based on quality of the timeshare, but the increase percentages should not. 

I have owned a condo in a 40-year old luxury high rise building for almost ten years and the fees today are only about 8% higher than they were in 2006.  That is less than a 1% annual increase and most of that was to increase the annual contribution to the reserves.  The building is in superb condition, is well funded, and has all the quality, luxury and amenities (except food service) that you will find at any of the Marriott timeshares, plus a few extra ones.  I have served on our condo Board for several years and I can tell you that it is just not that hard to do, especially today when utilities (a large portion of any budget) are dramatically lower than they have been for a long time.  I would have actually expected 2016 maintenance fees to go down, but of course that did not happen.


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## Sugarcubesea (May 15, 2016)

tschwa2 said:


> That's why some say they would never own anything other than an independent resort with an independent HOA who hires a management company and supplies the resort based on the best interest of the owners.
> 
> Some say having the hotel type management companies that control the boards and make the budget is a conflict of interest. They have their own interests ahead of those of the owners.



Two out of my three timeshares are independent resorts and they are run lean and mean and they have managed to upgrade and refurbish yearly with no additional cost to the TS owner except the yearly MF's.

Someone told me when I bought my first TS that the independent resorts are the way to go and I would agree.

The one corporate owned TS that I owned, I bought it with a specific purpose, once that purpose has been fulfilled, I will sell or give a way that unit.

For me, its cheaper paying my MF fee per year and staying in a 2 bedroom unit vs paying to stay in a hotel room that can accommodate my whole family.


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## dioxide45 (May 15, 2016)

BocaBoy said:


> With all due respect, these justifications for the continual maintenance fee increases are absolute poppycock.  Note that I am talking about the increases, not the absolute levels.  Absolute levels vary greatly based on quality of the timeshare, but the increase percentages should not.
> 
> I have owned a condo in a 40-year old luxury high rise building for almost ten years and the fees today are only about 8% higher than they were in 2006.  That is less than a 1% annual increase and most of that was to increase the annual contribution to the reserves.  The building is in superb condition, is well funded, and has all the quality, luxury and amenities (except food service) that you will find at any of the Marriott timeshares, plus a few extra ones.  I have served on our condo Board for several years and I can tell you that it is just not that hard to do, especially today when utilities (a large portion of any budget) are dramatically lower than they have been for a long time.  I would have actually expected 2016 maintenance fees to go down, but of course that did not happen.



I don't think this is a really fair comparison. The expenses that make up the financials of a timeshare resort are far different than a condominium. First, a condo does't renovate the inside of your unit when the time comes. There isn't someone paid by the condo that comes to clean your place every week and there is no front desk staff that needs to check you in and out. These are the items where we have seen the biggest increases over the past few years. It seems at least some resorts are increasing their reserves and we have seen jumps in front desk and housekeeping costs.


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## RLS50 (May 15, 2016)

IMO I don't think there is a single right or wrong answer.  There are elements of truth in many of the comments here.


- The real rate of inflation, since the FED and all the other central banks in the world went into money printing mode to save the global economy from collapse in 2007/2008, has been anywhere from 4% to 6% depending on what numbers you use.  The CPI that is reported is a political number and is pretty much useless as it relates to real cost increases the average person has been dealing with in their daily life.

- Regardless of the above, yes some timeshare companies are raising MF's too high, too fast and their main motivation is profit to their bottom line.  Some of these companies basically admit to that profit first factor in their annual report.   

- MF prices can also rise high and fast due to sloppy management or even mismanagement.   Or prices don't rise, but all of a sudden owners are hit with huge special assessments, because the "low" MF all along was underfunding reserves.  There have been many examples of this as well.

- At some point it will be interesting to see if the big corporate timeshare companies reach a tipping point since there is a smaller and smaller percentage of the overall population (even here in the U.S.) that can afford annual MF's averaging near or over $200-$250 per night.

- As those points above run in parallel or begin to converge, if one owns a timeshare now the best they can expect or demand is that regardless of whatever amount they are paying, they feel they are their family are getting some ROI that makes sense for them.   That ROI calculation will differ for each family and be some combination of factors, including but not limited to cost.  

- To be clear, it is not the cost of any single timeshare MF that is the key calculation involved for any family.  It is the percentage of disposable income the average family has available to it.   Families can make choices on what they spend that money on (cable TV, cell phones, dining out, luxury items, recreation, vacations, etc, etc,) but those decisions have to fit within the total disposable income budget.


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## Jason245 (May 15, 2016)

dioxide45 said:


> I don't think this is a really fair comparison. The expenses that make up the financials of a timeshare resort are far different than a condominium. First, a condo does't renovate the inside of your unit when the time comes. There isn't someone paid by the condo that comes to clean your place every week and there is no front desk staff that needs to check you in and out. These are the items where we have seen the biggest increases over the past few years. It seems at least some resorts are increasing their reserves and we have seen jumps in front desk and housekeeping costs.


You are forgetting costs of silverware,  paper products, laundry for towls bedding etc, costs for "upgrades " of units (flat screen TV, wifi etc).. costs of resort pools and staff for "activities" and free redbox type kiosks,  24/7 front desk responsiveness...Webber grills for common use..etc. cribs on site. .

At the end of the day,  some people prefer the on site ammeneties and pay for them.. does that make the accomodations a hybrid between a traditional vacation rental and a resort.. you betcha. . But if I had the choice between 80 a night for a bare bones place vs 140 a night for something better. . Well I can afford it and so I will do it.. and while dw and I  are  enjoying an infinity pool while the kids doing some type of organized and supervised "kids clubesc" activity I will continue to enjoy it instead of the traditional row of units with a large rectangle pool circa 1985.

Sent from my SAMSUNG-SM-N910A using Tapatalk


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## WBP (May 15, 2016)

BocaBoy said:


> With all due respect, these justifications for the continual maintenance fee increases are absolute poppycock.  Note that I am talking about the increases, not the absolute levels.  Absolute levels vary greatly based on quality of the timeshare, but the increase percentages should not.
> 
> I have owned a condo in a 40-year old luxury high rise building for almost ten years and the fees today are only about 8% higher than they were in 2006.  That is less than a 1% annual increase and most of that was to increase the annual contribution to the reserves.  The building is in superb condition, is well funded, and has all the quality, luxury and amenities (except food service) that you will find at any of the Marriott timeshares, plus a few extra ones.  I have served on our condo Board for several years and I can tell you that it is just not that hard to do, especially today when utilities (a large portion of any budget) are dramatically lower than they have been for a long time.  I would have actually expected 2016 maintenance fees to go down, but of course that did not happen.



In my opinion, you are comparing apples and oranges.

I too have had a long tenure on a condo board, and on a Marriott HOA.

The distinctions between running a residential condominium and a timeshare resort are dramatic. The fixed and variable costs associated with the operation of a timeshare resort (where guests are highly transient, and villas turn over, in some cases at nights at a time, and in other cases at weeks at a time (no where near similar to most residential condominiums), are dramatically higher than the fixed and variable costs of operating a residential condominium.

Imagine comparing the costs of operating a residential condominium in Any City, USA versus the costs of operating a timeshare resort in a resort destination like Orlando, where two-bedroom villas are not only frequently filled with the maximum number of occupants, or more, but large numbers of children, who are demanding on the infrastructure, hard and soft goods of the villa and resort. Add to that, that the frequent turnover of guests brings with it guests (particularly exchangers) who do not have "a pride of ownership," that residential condominium owners and >7 day renters at residential condominiums have. For residential condominiums, if the residential condominium HOA Board opens the door to AirBNB guest, that will change the face of that residential condominiums operations (and expenses).


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## Cropman (May 15, 2016)

WJS said:


> In my opinion, you are comparing apples and oranges.
> 
> I too have had a long tenure on a condo board, and on a Marriott HOA.
> 
> ...



I'm confused.  Didn't you say it was a lot more expensive to run a condo and then make the case that timeshare resorts were a lot more expensive to run?


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## dioxide45 (May 15, 2016)

Cropman said:


> I'm confused.  Didn't you say it was a lot more expensive to run a condo and then make the case that timeshare resorts were a lot more expensive to run?



Perhaps it is the below statement that is confusing?



WJS said:


> The fixed and variable costs associated with the operation of a residential condominium, dwarf the fixed and variable operating costs associated with the operation of a timeshare resort...



I think they mean that the costs of running a residential condominium are dwarfed by the costs of running a timeshare.


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## WBP (May 15, 2016)

dioxide45 said:


> Perhaps it is the below statement that is confusing?
> 
> 
> 
> I think they mean that the costs of running a residential condominium are dwarfed by the costs of running a timeshare.



Fixed, my mistake. Thank you. 

The costs of running a residential condominium are dwarfed by the costs of running a timeshare.

(Ed. note: a case for switching from decaffeinated coffee to caffeinated coffee).


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## Cropman (May 15, 2016)

WJS said:


> Fixed, my mistake. Thank you.
> 
> The costs of running a residential condominium are dwarfed by the costs of running a timeshare.
> 
> (Ed. note: a case for switching from decaffeinated coffee to caffeinated coffee).



:rofl::hysterical: I know the feeling.


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## JIMinNC (May 15, 2016)

BocaBoy said:


> With all due respect, these justifications for the continual maintenance fee increases are absolute poppycock.  Note that I am talking about the increases, not the absolute levels.  Absolute levels vary greatly based on quality of the timeshare, but the increase percentages should not.
> 
> I have owned a condo in a 40-year old luxury high rise building for almost ten years and the fees today are only about 8% higher than they were in 2006.  That is less than a 1% annual increase and most of that was to increase the annual contribution to the reserves.  The building is in superb condition, is well funded, and has all the quality, luxury and amenities (except food service) that you will find at any of the Marriott timeshares, plus a few extra ones.  I have served on our condo Board for several years and I can tell you that it is just not that hard to do, especially today when utilities (a large portion of any budget) are dramatically lower than they have been for a long time.  I would have actually expected 2016 maintenance fees to go down, but of course that did not happen.



I agree with dioxide45, Jason245, and WJS. For a whole ownership condo, the individual owners are generally responsible for the interior cleaning, furnishings, etc, not the HOA. In a whole ownership condo, the HOA is primarily responsible for the physical facilities, grounds, etc. and do not have the same people/staffing expenses that a timeshare resort does. There is also no daily or weekly guest turnover. As a result, the facility-based expenses a whole ownership HOA is responsible for are probably less subject to inflation than the more labor-intensive needs at a timeshare resort.

I would think the expense dynamics of a timeshare resort are probably closer to a hotel than a whole-ownership condo - the guest turnover is not as frequent as it is at a hotel, but the overall staffing needs and management needs look more like a hotel than they do a condominium HOA. A condo doesn't need a front desk, housekeeping, or need to maintain the condo furnishings. Therefore the cost inflation observed at a timeshare is probably closer to the cost inflation seen by hotels, not like the lower rates that are likely experienced by regular condos.

To that end, CNBC reported in January 2015 that hotel rates are expected to rise 5.4%:

http://www.cnbc.com/2015/01/26/us-average-hotel-room-rate-forecast-to-rise-54-percent.html

While that doesn't necessarily mean their costs are rising 5.4%, I think hotel cost inflation is a better proxy for timeshares than a condo HOA.


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## WBP (May 15, 2016)

BocaBoy said:


> With all due respect, these justifications for the continual maintenance fee increases are absolute poppycock.  Note that I am talking about the increases, not the absolute levels.  Absolute levels vary greatly based on quality of the timeshare, but the increase percentages should not.
> 
> I have owned a condo in a 40-year old luxury high rise building for almost ten years and the fees today are only about 8% higher than they were in 2006.  That is less than a 1% annual increase and most of that was to increase the annual contribution to the reserves.  The building is in superb condition, is well funded, and has all the quality, luxury and amenities (except food service) that you will find at any of the Marriott timeshares, plus a few extra ones.  I have served on our condo Board for several years and I can tell you that it is just not that hard to do, especially today when utilities (a large portion of any budget) are dramatically lower than they have been for a long time.  I would have actually expected 2016 maintenance fees to go down, but of course that did not happen.



I believe this may have been said elsewhere, but I will repeat it because I believe it to be quite relevant. If you look at the top five expense centers of your Marriott maintenance fee budget, you will see that those line items (e.g. housekeeping) are extremely sensitive to labor costs, personnel benefits, and changes in an economic climate that are influenced by, to a greater extent, Marriott operating in resort areas, where human resources are always a challenge, and where a labor-intensive resort, like a timeshare resort has expenses (and inflation) that just do not line up with a residential condominium. It would be nice if it did, but it doesn't. One graphic example may be to take the total number of residential unit keys in your residential condominium, benchmark it to an MVCI resort of comparable size, and look at the expenditure line items that are heavily influenced by supply and demand in resort areas (e.g. housekeeping). I suspect that you will find in a year to year comparison, that those line items have incurred substantial increases, based on what I have said above (in most cases, due to market conditions, and not Marriott price-gouging)

My suspicion is that it is an apples to oranges comparison.


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## answeeney (May 15, 2016)

This is an interesting thread. My take on the preceding comments is that there are three factors influencing annual dues inflation.

1.	Non-economic factors – the developer set initial dues artificially low to attract sales (e.g. by direct subsidy and/or by using its management influence to ensure contributions towards reserves are set too low). This should mean that, from the get go, dues are on an upward, above-inflation, trend and will stay there until they have both paid for previous underfunding and are also sufficient to meet future requirements. This could take many years (not so long if the resort is left to go to seed but longer if, like Marriott, the resorts are regularly refurbished). In my opinion this is the main reason for this thread.

2.	Microeconomic factors – the cost of labour, health insurance, or whatever, means that timeshare dues buck the short term inflation trend. This can be significant for a year or two or perhaps even four or five at a push but, as has already been pointed out earlier, is unlikely to be a factor for much longer (and definitely cannot continue indefinitely) especially when compared to hotel room inflation.

3.	Macroeconomic factors – timeshares become in greater and greater demand as the target population gain more disposable income to spend on this luxury item. Umm – not sure that works over the last few years. Even the Ritz Carlton bunch are squealing.


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## JIMinNC (May 15, 2016)

answeeney said:


> This is an interesting thread. My take on the preceding comments is that there are three factors influencing annual dues inflation.
> 
> 1.	Non-economic factors – the developer set initial dues artificially low to attract sales (e.g. by direct subsidy and/or by using its management influence to ensure contributions towards reserves are set too low). This should mean that, from the get go, dues are on an upward, above-inflation, trend and will stay there until they have both paid for previous underfunding and are also sufficient to meet future requirements. This could take many years (not so long if the resort is left to go to seed but longer if, like Marriott, the resorts are regularly refurbished). In my opinion this is the main reason for this thread.



This could have definitely been a factor in the early years of weeks resorts, but many of the MVCI resorts have been sold out for over a decade and have been maintained regularly. I would think this effect is long gone.



> 2.	Microeconomic factors – the cost of labour, health insurance, or whatever, means that timeshare dues buck the short term inflation trend. This can be significant for a year or two or perhaps even four or five at a push but, as has already been pointed out earlier, is unlikely to be a factor for much longer (and definitely cannot continue indefinitely) especially when compared to hotel room inflation.



I think you underestimate the degree to which this could be a long-term vs a transitory factor. Resort areas almost always have labor supply issues that cause a demand-supply imbalance that leads to greater inflation potential in labor costs. As far as comparing to hotels, a few of the things that I've been able to find on the web point to hotel rates inflating consistently over time in the 2.5% to 5% annual range. While the available data is less transparent than our maintenance fee bills, I think hotels do experience a similar rate of inflation to what we experience in maintenance fees - for the same exact reasons. I know five or six years ago, I could book a Hampton Inn hotel I use every spring for a business trip for around $100/night. For 2017, that same rate is $134. That's a 5-6% annual increase.



> 3.	Macroeconomic factors – timeshares become in greater and greater demand as the target population gain more disposable income to spend on this luxury item. Umm – not sure that works over the last few years. Even the Ritz Carlton bunch are squealing.



Greater demand may allow developers to charge higher sales prices for timeshare weeks or points, but since maintenance fees are required to be cost based, they should not be impacted by the demand for the underlying product. The only thing that should impact maintenance fees are the costs of providing the resort services and maintaining the property and accommodations.

One factor you didn't mention is that less scrupulous developers/management companies can use their board control to vote themselves a big raise in their Management Fees - as I think was the case for my DRI numbers earlier in the thread - but I don't think this is an issue with Marriott.


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## BocaBoy (May 16, 2016)

JIMinNC said:


> I think hotels do experience a similar rate of inflation to what we experience in maintenance fees - for the same exact reasons. I know five or six years ago, I could book a Hampton Inn hotel I use every spring for a business trip for around $100/night. For 2017, that same rate is $134. That's a 5-6% annual increase.



This ignores the fact that hotel rates actually dropped considerably during the Great Recession and in the couple of years immediately thereafter.  Much of the increase in the last five years is reversing those declines.  Also, room rates are based on supply and demand for travelers, which is far different than the supply and demand of the business's costs.  Hotels have become much more profitable since the Great Recession in part due to their ability to charge higher rates.


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## BocaBoy (May 16, 2016)

These responses are really cute.  I said that the continual large increases were not justified, and many of the responses instead talk about absolute levels of costs.  Of course timeshares are more expensive to operate than a residential condominium, but that is not the point.  Many of the responses cite labor costs (which are also a huge part of the budget in my condominium building), but in fact labor costs (other than executive pay) have been rather stagnant over the past decade.  Even in resort areas, labor costs have increased far less than the maintenance fees.  And don't forget that these items kept increasing substantially in our timeshare budgets right through the Great Recession when most resort area economies were suffering very badly.  Florida, Las Vegas and Arizona were among the hardest hit areas, but the Marriott timeshare budgets in those areas kept increasing even during the worst of times.  The situation is out of control.


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## JIMinNC (May 16, 2016)

BocaBoy said:


> These responses are really cute.  I said that the continual large increases were not justified, and many of the responses instead talk about absolute levels of costs.  Of course timeshares are more expensive to operate than a residential condominium, but that is not the point.  Many of the responses cite labor costs (which are also a huge part of the budget in my condominium building), but in fact labor costs (other than executive pay) have been rather stagnant over the past decade.  Even in resort areas, labor costs have increased far less than the maintenance fees.  And don't forget that these items kept increasing substantially in our timeshare budgets right through the Great Recession when most resort area economies were suffering very badly.  Florida, Las Vegas and Arizona were among the hardest hit areas, but the Marriott timeshare budgets in those areas kept increasing even during the worst of times.  The situation is out of control.



The point I think we were making was not that timeshares were more expensive - that is a given - we were noting that the types of expenses that drive the budgets of timeshares vs condos were different, and therefore may rise at different rates. While I agree that actual direct compensation has not risen (other than executive pay), total labor costs including benefits are going up. Ask any small businessman what's happened to his benefits costs over the last 10-12 years and he'll likely tell you he would love to have only had a 5% annual rise.

If you don't think our analysis of the reasons for the increases are correct, what is your theory? I don't think it can be the OP's original contention that it is to make Marriott Vacations Worldwide more money, as the management fees represent only a small portion of the total HOA expenses.

I will concede that a timeshare HOA maybe doesn't have quite the same incentive as a for-profit business to hardball negotiate their services contracts with their vendors. It's easier for an HOA to just increase the maintenance fee than it is for a for-profit business to increase revenue by raising prices - the business has to consider the impact of the price increase on demand for their product/service, and an HOA does not. So in that sense, I could see where a timeshare HOA may not run as tight of a ship from an expense control standpoint. If the resort manager's representatives have a major voice on the board versus owners, they also don't have quite the same cost control incentives as an truly owner-controlled board.

That last point brings up something I've wondered about - on our old DRI Kaanapali Beach Club Board, a majority of the board were actual employees of DRI. When the proxies come out every year for Marriott's Barony Beach Club, based on the bios that are sent out, none are shown to be employed by Marriott Vacations Worldwide. So does Marriott control MVC resort boards, or are they owner-controlled?


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## Desert Pilgrim (May 16, 2016)

*Developers and Delinquent Owners Push Up Maintenance Fees*

As an experienced board member of a timeshare owners' association, I'd like to shed some more light on why maintenance fees go up.  Actually ours at the Villas of Cave Creek have not gone up during the past 4 years and are lower than they were 5 years ago.  Nonetheless, we will probably have to raise them again at some point due to all the normal reasons.  During the past 4 years, we have kept fees from increasing in large part through reduced management fees and increasing revenues from rentals of "locked-out" units.

1.  As owner delinquencies increase (failure to pay maintenance fees), the remaining owners must pick up the deadbeats' share of the burden.  That is reflected in annual budgets as something like, "Allowance for bad debts".

Solution:  Owner's Associations must take legal action to foreclose on delinquent intervals and regain ownership.  Then, they need to find ways to get those intervals into the hands of new owners who will pay their maintenance fees.  At the same time, owner's associations and their resort managers must do everything they can to preserve and increase quality , value and guest satisfaction.

2.  Lost rental revenue due to sneaky developer-managers.  Developer-managers are known to play games with "locked-out" weeks belonging to delinquent owners who can't use their interval.  Instead of maximizing revenues to the timeshare owners association, these sneaky managers may be using those locked-out intervals for their own purposes--renting them and pocketing the money or offering the time as incentives to bring in prospective buyers of developer-owned inventory.  

Our rental revenue from locked-out weeks has gone from almost nothing under the previous developer-manager to more than $80,000 per year under our independent, owner-focused manager.

3.  Many timeshare resorts are being ripped off by bizarre, "cost plus" management contracts with developer-managers that incentivise management companies to increase expenses.  Under the management contract that our resort had before kicking out the developer-manager, the manager received 10 percent of every dollar spent, including (!!!!) money that was simply transferred to our own replacement reserve account.  Every time any expense, such as utilities or insurance increased, our developer-manager in effect added on a 10 percent "tip" for themselves.  Look at the "management fee" in the annual budget for your timeshare to see if this is the case.

In other words, based our experience, we would suggest communicating with your timeshare board to make sure they are playing an active role in controlling costs, reducing delinquencies, and increasing revenues. 

Developer-managers discourage boards from being anything more than rubber stamps, and they tend to answer tough question from owners and owners association board members with snow jobs and stone-walling.

If your resort has such a developer-manager, lobby and encourage your timeshare board members to demand straight answers from the management company to tough questions like, "Where is our revenue from the rental of locked-out intervals?"  When answers aren't forthcoming, ask your boards to start the process of terminating the developer-manager and finding an owner-focused replacement. A first step will be for your Board of Directors to get their own, board-paid lawyer.  

We ultimately had to call and win a special election of owners to cancel the lop-sided, auto-renewing contract with our former developer-manager.

Good luck!


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## tk666 (May 16, 2016)

*Budget increase against CPI %*

I thank you for all your comments.
They are really helpful.

*Please let me explain, why I started that thread.*

When you signed your contract, you got a HOPA document.
Most owners did not read, but I did it, when I contracted.

There is a most interesting part about budget increases from year to year.
The definition against ANY increase was essential for my purchase, because it is limiting the budget increase. It should be around the countries CPI.
Any more should get explained because it may be irregular unknown issues.

That contracted limitation did not work during the last 5 years and the explanations where not given. Therefore the overcharging is aginst the HOPA-contract.

I have Marriott weeks in the US, Spain and Thailand and it is the same overcharging everywhere.

Please allow me, to give you some more bachground:
1. the single resort budgets and prior year costs are not audited. 
2. increases for keeping the resort up to date and in a good quality, are planned for about 10 years by external consulting firms.
the yearly budget forecasted are most of years not spent, because not all funiture has to get exchanged.
3. Human costs are decreased - as you might know.
4. All other costs are calculated and covered in the CPI.

There is no need for budget increases of 4-5% over CPI.


I confronted the VP-management responsible for the budget.
No answer was given. Not at all about the unexpectable costs.
What do you think, why I did not get explanations - there are no.
The only answer given, was the comment, that the owner-represents approved the new budget. (we know, how that works to get any approval from selected candidates).

My reaction is, not to pay the 5 years overcharging with the next maintenance fees.


It would be helpful, wen you could ask your owner-represents and the Marriott-Management, to explain the oercharging.

*I would be happy, to hear from your experience.*

:deadhorse:


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## RLS50 (May 16, 2016)

answeeney said:


> 3.	Macroeconomic factors – timeshares become in greater and greater demand as the target population gain more disposable income to spend on this luxury item. Umm – not sure that works over the last few years. Even the Ritz Carlton bunch are squealing.


I know I mentioned disposable income, but if you were referring to my comments I think you have the conclusion I was speaking to in reverse.

I do not believe...based on math and demographics...that timeshares will be in greater and greater demand.   In fact, I think it is possible demand could begin to decrease in coming years.  As the population ages and there is a increase in single parent families and less children per couple in traditional family units, timeshares would seem to be facing a future of less demand, not more demand.   

Add in the accelerating costs, and the economic factors negatively impacting a greater segment of the population each year, and you could have a potential "Ponzi type" scenario unfolding.   Not in a literal sense of course, and not in the intentional sense that any company is trying to commit fraud, but in the sense that you have increasing costs combined with less organic demand, and at some point there will be a tipping point reached.

Even Marriott, who has built a tremendous timeshare brand and does an outstanding job of keeping their properties in top shape and their staff well trained, have been raising MF prices significantly during a period where their average target customer base is both aging out as well as not getting average salary increases of 4% to 5% per year over the last 6, 7, 8, 9, etc years.

My point in this thread isn't to say BocaBoy is 100% correct or that the group of posters who disagree with him are 100% correct.  I think both sides make good points and are correct to a degree.

My main point is that regardless of whether these annual cost increases are totally justified or not, it really doesn't matter.   General income stagnation, an aging population, decreased family sizes, and an increase in single parent families (much less disposable income) suggest that 4%-5% increases in perpetuity will reach a tipping point.  Mathematically it does not seem tenable.

So I am really talking to the what is (or what seems to be the direction), not the why is.

JMO.


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## JIMinNC (May 16, 2016)

Desert Pilgrim said:


> As an experienced board member of a timeshare owners' association, I'd like to shed some more light on why maintenance fees go up.  Actually ours at the Villas of Cave Creek have not gone up during the past 4 years and are lower than they were 5 years ago.  Nonetheless, we will probably have to raise them again at some point due to all the normal reasons.  During the past 4 years, we have kept fees from increasing in large part through reduced management fees and increasing revenues from rentals of "locked-out" units.
> 
> 1.  As owner delinquencies increase (failure to pay maintenance fees), the remaining owners must pick up the deadbeats' share of the burden.  That is reflected in annual budgets as something like, "Allowance for bad debts".
> 
> ...



I think these are all good points, but are relevant mainly for independent timeshares where the board has the discretion to change management companies if they so desire. In the large timeshare networks that now dominate the business - particularly the hotel-affiliated systems like Marriott Vacation Club - a HOA changing management companies would mean dropping out of the system and losing the internal exchange, points-based options, and system-wide quality control that comes with being part of a system like Marriott or Hilton. Since it's generally the system/network/brand that makes timeshare groups like Marriott, Hilton, Starwood, etc so attractive, changing management companies really isn't an option. And in the hotel-based systems, the HOAs get no revenue from unit rentals, those rentals are handled through the hotel-affiliated reservation systems and are a revenue stream for the developer/manager.

In the final analysis, perhaps that lock that the hotel-affiliated management companies have on the management contract because of the brand affiliation means the BOD has no real leverage to force cost containment while still keeping standards high - there's basically no competition for the management contract and the BOD can't change managers. 

From my perspective, I think the 3.5% increases we've seen so far as Barony owners are modest, at least in comparison to my past experience with DRI. (But everyone has a different yardstick on what's reasonable, I guess. My DRI experience just makes almost anything seem reasonable.) As long as they stay modest, I think the benefits of the overall Marriott brand and the MVC network far outweigh the issues with rising maintenance fees - especially since hotel rates are rising every year at a similar rate. An independent timeshare has no appeal to me, regardless of how low the maintenance fees or maintenance fee increases in such a property might be. I suspect many (or most) Marriott owners may feel the same way, or they would not have paid the higher price of entry to the MVC system in the first place.


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## JIMinNC (May 16, 2016)

tk666 said:


> I thank you for all your comments.
> They are really helpful.
> 
> *Please let me explain, why I started that thread.*
> ...



I'm not sure what a HOPA document is. Is it some kind of disclosure document used in Europe?

Here in the U.S. we have disclosure documents also, the main one is what is called a "Public Offering Statement" that contains HOA association by-laws, the details of the real estate, resort management, exchange procedures, booking procedures, etc.

No where in our documents is there any language referencing the CPI or in any way limiting the amount that maintenance fees can increase. In fact, the legal documents for every U.S. timeshare that I am aware of says the BOD has total discretion to set the maintenance fee based solely on the costs of operating the resort. There are no limitations on increases whatsoever.


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## l0410z (May 16, 2016)

This is an interesting  high level discussion but the Monarch actually provides a good level of detail as I am sure most HOA's do.   The Monarch HOA provides a 32 year history of high level Operating Fees, Reserve Fees and Prop Tax.  They provide detail  year to year comparison of 2015 to 2016 and a line item  explanation of the operating fees.  

2016 - The Reserve fee (458.49) and Prop Tax (107.09) make up 40.5% of my 1397.10 MF.  The next 4 years the reserve fee is inflated by 150 because of some extra work that is required given the age of the buildings and the proximity to the water. The property tax is in the 2015 and 2016  operating expenses so I will take them out.  The increase in property tax from 15 to 16 was 3.4%.  

Just comparing Operating expenses 2015 to 2016
2015 Operating fee 917.53 - Property Tax (103.84) = 813.69 
2016 Operating fee 957.10 - Property Tax  (107.09) = 850.01
Increase 3.95 % 

Of the operating fee, the following expenses (all in 2016 dollars ) go to MVCI...  Accounting (20.13 up 8.0 %) , Billing and Collections (8.85 up 2.8%) , Housekeeping 194.93 up 3.8%), Human Resources (11.82 up 15.2%), Management Fee (127.01 up 18.2%) and Owner Services (10.27 up 17.6%)   
in 2015 this went to MVCI 343.70 
in 2016 is going to   MVCI 373.01
Increase 8.53%

Increase in operating costs with MVCI taken out
2015 (813.69 - 343.70) = 469.99
2016 (850.01-  373.01) = 477.00
Increase 1.15% 

So MVCI must be experiencing 740% more inflation for their costs than the other costs in the Monarchs operating expenses.    The answer to why the operating portion of the MF is going up so high... we are creating shareholder value for VAC.


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## answeeney (May 16, 2016)

JIMinNC said:


> I'm not sure what a HOPA document is. Is it some kind of disclosure document used in Europe?
> 
> Here in the U.S. we have disclosure documents also, the main one is what is called a "Public Offering Statement" that contains HOA association by-laws, the details of the real estate, resort management, exchange procedures, booking procedures, etc.
> 
> No where in our documents is there any language referencing the CPI or in any way limiting the amount that maintenance fees can increase. In fact, the legal documents for every U.S. timeshare that I am aware of says the BOD has total discretion to set the maintenance fee based solely on the costs of operating the resort. There are no limitations on increases whatsoever.



HOPA stands for Holiday Owners Purchase Agreement and here is the relevant excerpt from that relating to Club Son Antem:

_The Maintenance Fee for the current Use Year is set forth in the Term Sheet. Management intends that the Maintenance Fee charged to Holiday Owners will not increase in excess of the CPI (Consumer Price Index) established by the Instituto Nacional de Estadistica or replacing entity in any given Use Year, unless unforeseen costs arise such as new taxes, insurance premium increases, electricity rate increases or other costs that are outside the control of Management or that are considered necessary or desirable to meet the needs of the Resort and Holiday Owners._


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## Jason245 (May 16, 2016)

answeeney said:


> HOPA stands for Holiday Owners Purchase Agreement and here is the relevant excerpt from that relating to Club Son Antem:
> 
> _The Maintenance Fee for the current Use Year is set forth in the Term Sheet. Management intends that the Maintenance Fee charged to Holiday Owners will not increase in excess of the CPI (Consumer Price Index) established by the Instituto Nacional de Estadistica or replacing entity in any given Use Year, unless unforeseen costs arise such as new taxes, insurance premium increases, electricity rate increases or other costs that are outside the control of Management or that are considered necessary or desirable to meet the needs of the Resort and Holiday Owners._


An intention is not a promise or a legal requirement. 

Sent from my SAMSUNG-SM-N910A using Tapatalk


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## answeeney (May 16, 2016)

Jason245 said:


> An intention is not a promise or a legal requirement.



Maybe, maybe not.

I suspect such a statement would carry some weight if a test case ever arose. In particular, if Management fails to act in accordance with its stated intent then it would have to provide justification for not doing so. No doubt some sort of justification would be wheeled out and the Courts would then decide whether it was sufficient. Bear in mind too that European Courts have a track record of supporting consumer interests against global corporations.


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## IMSpock01 (May 16, 2016)

Sugarcubesea said:


> Two out of my three timeshares are independent resorts and they are run lean and mean and they have managed to upgrade and refurbish yearly with no additional cost to the TS owner except the yearly MF's.
> 
> Someone told me when I bought my first TS that the independent resorts are the way to go and I would agree.
> 
> ...


is there a thread on these "independent resorts" you speak of.... like a comprehensive list of some sort?? 

Sent from my Nexus 6P using Tapatalk


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## JIMinNC (May 16, 2016)

answeeney said:


> HOPA stands for Holiday Owners Purchase Agreement and here is the relevant excerpt from that relating to Club Son Antem:
> 
> _The Maintenance Fee for the current Use Year is set forth in the Term Sheet. Management intends that the Maintenance Fee charged to Holiday Owners will not increase in excess of the CPI (Consumer Price Index) established by the Instituto Nacional de Estadistica or replacing entity in any given Use Year, unless unforeseen costs arise such as new taxes, insurance premium increases, electricity rate increases or other costs that are outside the control of Management or that are considered necessary or desirable to meet the needs of the Resort and Holiday Owners._





answeeney said:


> Maybe, maybe not.
> 
> I suspect such a statement would carry some weight if a test case ever arose. In particular, if Management fails to act in accordance with its stated intent then it would have to provide justification for not doing so. No doubt some sort of justification would be wheeled out and the Courts would then decide whether it was sufficient. Bear in mind too that European Courts have a track record of supporting consumer interests against global corporations.



As I read that phrase from the HOPA, all management would have to do is show that actual costs increased more than the CPI. It gives them the latitude to increase the fee in excess of the CPI for any "other costs outside the control of Management" plus it also allows them to justify an increase for any thing considered "desirable to meet the needs of the Resort and Holiday Owners." I don't know about European laws, but at least in the U.S., that language would seem to give them more than enough latitude to do just about anything they want. The CPI restriction is there to create an illusion of a restriction that in practice does not really exist.


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## Old Hickory (May 16, 2016)

tugatlast said:


> First think compounded interest. Then apply that principal to your rising costs. Then figure out what you will really be paying 10 years from now. Then add in that it is quite difficult to sell your TS now, what will it be like then. Then ask if any of current board members also work for the managing team. Then answer the question why most people will not serve on the board. Add it all up and then think Ponzi.



Your 2nd post?


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## JIMinNC (May 16, 2016)

l0410z said:


> This is an interesting  high level discussion but the Monarch actually provides a good level of detail as I am sure most HOA's do.   The Monarch HOA provides a 32 year history of high level Operating Fees, Reserve Fees and Prop Tax.  They provide detail  year to year comparison of 2015 to 2016 and a line item  explanation of the operating fees.
> 
> 2016 - The Reserve fee (458.49) and Prop Tax (107.09) make up 40.5% of my 1397.10 MF.  The next 4 years the reserve fee is inflated by 150 because of some extra work that is required given the age of the buildings and the proximity to the water. The property tax is in the 2015 and 2016  operating expenses so I will take them out.  The increase in property tax from 15 to 16 was 3.4%.
> 
> ...



Is there something specific in the Monarch legal documents that allows MVC to increase the Management Fee more than the increase in costs? In the Barony Management Agreement, the Management Fee is capped at 10% of the monies collected for all operating costs/taxes/reserves (exclusive of the Management Fee itself). So since in an HOA Receipts equal Expenses, if expenses go up 3%, the management fee also goes up 3%. But your numbers show the Monarch Management Fee up 18%.

Second, the other expenses that you attribute to "going to MVCI" - the expenses for accounting, human resources, owner services, etc. - may in part be paid to outside contractors like CPA firms and/or be direct costs (i.e. - the cost of housekeeping salaries/benefits and supplies; the internal chargebacks of accounting/owner services expenses, etc). I see that as cost recovery, not profit to VAC. In fact, on the VAC annual audited 10-K, there is an offset for "Resort Management and Other Services Expenses" against their "Resort Management and Other Services Revenues". It's not a 1:1 offset because that revenue category also includes the Destination Club dues; resales commissions; food, beverage, and golf revenue; and other miscellaneous revenue not associated with contract sales or resort management. There is also a large revenue category on the 10-K called "Cost Reimbursements" that appear to be some kind of expense pass-through as well. I believe that accounting rules require that anything characterized as a direct offset expense to revenue or a cost reimbursement must truly be cost based. But because of these many factors, there's no transparency into whether the expenses you noted in your posts include a profit margin to VAC or are just pure expense pass through. My suspicion is they are more pass-through and the real profit to VAC is in the Management Fee itself.


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## JIMinNC (May 16, 2016)

As an addendum to my post just above, I found the description of the "Cost Reimbursements" in the notes to the financial statements on the 2015 10-K. My supposition above seems correct that they are direct pass-through of expenses and do not include any margin to VAC:  



> *Cost Reimbursements*
> Cost reimbursements include direct and indirect costs that property owners’ associations reimburse to us. In accordance with the accounting guidance for “gross versus net” presentation, we record these revenues on a gross basis. These costs primarily consist of payroll and payroll related costs for management of the property owners’ associations and other services we provide where we are the employer. We recognize cost reimbursements when we incur the related reimbursable costs. Cost reimbursements consist of actual expenses with no added margin.



So based on this, those other monies that you noted were paid to MVC do not represent a source of profits to VAC. They are only direct reimbursements of costs incurred by VAC on behalf of the Owner's Associations. I think the Management Fee itself is the primary way HOAs add to VAC shareholder value.


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## BocaBoy (May 16, 2016)

Desert Pilgrim said:


> As an experienced board member of a timeshare owners' association, I'd like to shed some more light on why maintenance fees go up.  Actually ours at the Villas of Cave Creek have not gone up during the past 4 years and are lower than they were 5 years ago.  Nonetheless, we will probably have to raise them again at some point due to all the normal reasons.  During the past 4 years, we have kept fees from increasing in large part through reduced management fees and increasing revenues from rentals of "locked-out" units.
> 
> 1.  As owner delinquencies increase (failure to pay maintenance fees), the remaining owners must pick up the deadbeats' share of the burden.  That is reflected in annual budgets as something like, "Allowance for bad debts".
> 
> ...



Thank you for this post.  The point I take away from it is that the management company (Marriott in this thread) is indeed largely responsible for the high level of annual maintenance fee increases.  None of my comments tried to place the blame on a particular party (i.e., Marriott versus the HOA), but recognize that little effort is being made to control these costs.  I don't much care which party is responsible.

Those comments that basically say we have no control over costs if we want to keep Marriott miss the point.  It may well be that one concludes that owning Marriott with the increases is preferable to not owning it.  However, that does not mean that the level of annual increases is justified or reasonable.

I have owned Marriott timeshares for 29 years.  I think it is interesting to note that they did a very good job of controlling maintenance fees  for the first 15-20 years of that period, in some years even reducing the maintenance fees slightly.  However, things started to get out of control when inflation dropped significantly in the economy.


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## l0410z (May 16, 2016)

JIMinNC said:


> Is there something specific in the Monarch legal documents that allows MVC to increase the Management Fee more than the increase in costs? In the Barony Management Agreement, the Management Fee is capped at 10% of the monies collected for all operating costs/taxes/reserves (exclusive of the Management Fee itself). So since in an HOA Receipts equal Expenses, if expenses go up 3%, the management fee also goes up 3%. But your numbers show the Monarch Management Fee up 18%.



I have no clue.  I purchased resale and the transferred deed is all I have.  I do trust the HOA and believe that they do their job.  I have to believe that the HOA questions the costs and speaks to other timeshares on HHI.  The GM at the Monarch handles all of the Marriott properties on Sea Pines given the relatively small sizes of the resorts.  If not for the 150 extra for the reserve fee this year, I think the 1245 MF will be in line with the other HHI properties.            



JIMinNC said:


> Second, the other expenses that you attribute to "going to MVCI" - the expenses for accounting, human resources, owner services, etc. - may in part be paid to outside contractors like CPA firms and/or be direct costs (i.e. - the cost of housekeeping salaries/benefits and supplies; the internal chargebacks of accounting/owner services expenses, etc). I see that as cost recovery, not profit to VAC. In fact, on the VAC annual audited 10-K, there is an offset for "Resort Management and Other Services Expenses" against their "Resort Management and Other Services Revenues". It's not a 1:1 offset because that revenue category also includes the Destination Club dues; resales commissions; food, beverage, and golf revenue; and other miscellaneous revenue not associated with contract sales or resort management. There is also a large revenue category on the 10-K called "Cost Reimbursements" that appear to be some kind of expense pass-through as well. I believe that accounting rules require that anything characterized as a direct offset expense to revenue or a cost reimbursement must truly be cost based. But because of these many factors, there's no transparency into whether the expenses you noted in your posts include a profit margin to VAC or are just pure expense pass through. My suspicion is they are more pass-through and the real profit to VAC is in the Management Fee itself.



 I worked for a very large Technology company for a very long time.  Break even was the cost of services plus the SG&A percent for the company to generate all revenue.  It was too difficult to break it down by line of business and not in the company's interest to do it.  True  cost is a  nebulous term.  I would guess that the Monarch is being charged their share of what every Marriott pays.  This being said, the percent increase given to VAC is much higher than the percent of other operating costs.


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## JIMinNC (May 16, 2016)

BocaBoy said:


> I have owned Marriott timeshares for 29 years.  I think it is interesting to note that they did a very good job of controlling maintenance fees  for the first 15-20 years of that period, in some years even reducing the maintenance fees slightly.  However, things started to get out of control when inflation dropped significantly in the economy.



Perhaps the point you make that things started getting out of control when inflation dropped, might add credibility to those posts in this thread that implied that the top line CPI number that gets published really understates the real rate of inflation we all experience. I know it seems to me that the price of things I buy seems to go up a lot more than 1% - 2% a year. Could it be that the deflationary impact of things that naturally drop in price over time - like technology - serve to mask the real rises in other things that don't benefit from the advances in technology?

In any event, I think we do agree that the incentives are really not there for an "in house" management firm like Marriott to be doggedly focused on cost control like an truly independent manager and board might be. Even if a Marriott HOA board is technically independent, what "stick" to they really have to force more accountability on the part of Marriott as resort manager - if that is indeed the issue? Marriott knows most HOAs want to stay part of the MVC system and know that losing that affiliation would be a major negative to most owners who value the brand affiliation and the network. They can't be too concerned about losing a management contract.

But that still begs the question, are the MVC HOA boards independent? My sense is that at least at Barony, owners control most or all of the board seats as opposed to MVC insiders. But how much ability the Board realistically has to influence Marriott's management decisions, even if they are technically independent, is the second part of that question?


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## Saintsfanfl (May 16, 2016)

JIMinNC said:


> Could it be that the deflationary impact of things that naturally drop in price over time - like technology - serve to mask the real rises in other things that don't benefit from the advances in technology?



This is true in many areas. If gas goes from $4.00 to $2.00 it would heavily lower inflation since it is a component of the calculation. That said, if you stretch it out over a long period of time it will even out. 

If you knew the numbers you could perform an inflation rate just for timeshares by only using the components relevant, but you would find that things like gasoline prices still affect timeshare expenses to some degree. 

In the end the long term result is still going to point to most timeshare fees rising faster than they should, largely due to being too low early on.


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## RLS50 (May 16, 2016)

I don't want to turn this into a finance thread, but real world inflation has been averaging 4% to 6% for years now, especially since the great coordinated "reflation" by Central Banks globally after 2007/2008.

I am not attempting to blame anybody for this, nor am I making a political statement, nor am I suggesting that the Marriott increases are justified merely because they seem to be tracking the real world annual inflation rate (around 5% give or take for years now).  

Just saying that costs of things real people use or need has went up for almost everyone while incomes have largely stagnated, been reduced, or gotten smaller.   Food, fuel, housing, autos, insurance, benefits, education, etc.  All increased across the board, some even by double digits.  For example, just looking at food items for example, not only have prices increased over the past 7-8 years, but at the same time package sizes have been reduced for many items anywhere from 5% to 20%. 

The reported CPI numbers have almost no relevance for the average American.  The calculation itself has changed multiple times over the last 3 decades (and both parties share equally in the changes made).   Originally the historical motivation of those changes seemed to be the desire by both parties to prove that the inflation scares of the 1970s and 1980's were under control and behind the economy.  And now it is a useful tool for budgets presented by both political parties to show projected future deficits related to SS and Medicare as much smaller than they likely are in reality.

So Marriott's MF increases seem to have tracked the real inflation rate.  Does that mean those increases have been justified?  Not neccessarily.   Is the current rate of what appears to be 4% to 6% MF increases annually sustainable in the longer term?   Absolutely not.  The math doesn't work.   If they keep increasing at the current rates there are multiple thresholds being breached where based on average household incomes, more and more people will "drop out of the pool" of potential buyers / stable owners.


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## BocaBoy (May 16, 2016)

RLS50 said:


> I don't want to turn this into a finance thread, but real world inflation has been averaging 4% to 6% for years now, especially since the great coordinated "reflation" by Central Banks globally after 2007/2008.
> 
> I am not attempting to blame anybody for this, nor am I making a political statement, nor am I suggesting that the Marriott increases are justified merely because they seem to be tracking the real world annual inflation rate (around 5% give or take for years now).
> 
> ...


Huh?  The real inflation rate has been 4%-6% for the past few years?  Fuel has gone up?  You also say incomes are down or stagnant, and that is a major component of timeshare costs.  The central banks are trying to inflate because they are very worried about the prospect of deflation.  I must have spending patterns a lot different than others here because I have noticed very little overall inflation the past several years.  Some things are up, yes, but others like fuel are way down.


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## JIMinNC (May 16, 2016)

BocaBoy said:


> Huh?  The real inflation rate has been 4%-6% for the past few years?  Fuel has gone up?  You also say incomes are down or stagnant, and that is a major component of timeshare costs.  The central banks are trying to inflate because they are very worried about the prospect of deflation.  I must have spending patterns a lot different than others here because I have noticed very little overall inflation the past several years.  Some things are up, yes, but others like fuel are way down.



Thinking about our family budget, the only thing I can say that hasn't gone up in price over the last few years is gasoline/natural gas. My wife says her food costs are up; I know our landline and cell phone bills are higher; our cable bill is higher; prices at the restaurants we frequent are noticeably higher; the landscape company that handles our lawn maintenance and our pest control company increase prices every year supposedly due to 'increased labor costs;" I can't seem to get cheap air fares any more; as I noted in a post above, hotel costs are up; our health insurance costs more; even the place I get my hair cut has upped the price from $12 to $13. Fortunately, our incomes have so far more than kept up, but inflation seems more than nominal to me.

I can't reconcile the divergence between what I see every day and the stated inflation rate and central bank/Fed policies which, as you say, seem to be concerned about deflation. Janet Yellen knows a lot more about the economy and what's going on than I do, so I can't explain the divergence in perception, but the statements made by RLS50 resonate more with my personal experience. I guess that's why the idea of 3% to 5% inflation of maintenance fees doesn't seem excessive to me.


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## RLS50 (May 16, 2016)

BocaBoy said:


> Huh?  The real inflation rate has been 4%-6% for the past few years?  Fuel has gone up?  You also say incomes are down or stagnant, and that is a major component of timeshare costs.  The central banks are trying to inflate because they are very worried about the prospect of deflation.  I must have spending patterns a lot different than others here because I have noticed very little overall inflation the past several years.  Some things are up, yes, but others like fuel are way down.


Boca,

Believe it or not, I think I am closer to your position on this topic than you might think.

A few things though...

- Yes, fuel has gone up.  Only recently has it dropped in the last 12 months...but even today it is higher in inflation adjusted rates then it has been in decades previously.

http://energy.gov/eere/vehicles/fac...storical-annual-gasoline-pump-price-1929-2015


- Yes, incomes are stagnant, but I did not say that was a major component of timeshare costs.  I think you might be confused on my point.  I said that largely stagnant wages for a significant portion of the population means that timeshare costs cannot keep going up at 5% a year.   The higher they rise, the less the average family will be able to afford ever increasing annual fees.

http://www.epi.org/nominal-wage-tracker/


- Yes, agreed Central Banks were / are worried about deflation.   That is why they implemented policies that generated inflation.   And they have largely succeeded, except in the category of wage inflation, which is something that they hoped / expected they would be able to reflate along with other goods and services.   They haven't been able to do so.

And please note, I am not here to say any inflation is all bad.  The real problem isn't true inflation of 4% to 6%.  The bigger problem is that wages have not been inflating.  So for some families the areas inflating the fastest (tuition, medical, etc) is eliminating their disposable income.

http://www.advisorperspectives.com/dshort/updates/CPI-Category-Overview.php



My main point again, is that if timeshare companies, even the best ones like Marriott, keep increasing fees at annual rates of 5% or so, there will be a tipping point reached where an even larger segment of the population will be forced to bow out.   In that scenario I would expect to see timeshare property values to decrease as well.   

In fact, if you examine the charts I provided, and ones similar to them, an argument could be made that the economic and demographic sweet spot for timeshares might have been from the mid-1980's to mid-2000's (1985ish to 2005ish).  After 2005 is when timeshare MF's seem to have really started to escalate across the board faster than in previous years.   Speaking in general only, not absolutes.


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## bw3 (May 16, 2016)

*When do you fire Marriott Vacation Club*

In the final analysis, perhaps that lock that the hotel-affiliated management companies have on the management contract because of the brand affiliation means the BOD has no real leverage to force cost containment while still keeping standards high - there's basically no competition for the management contract and the BOD can't change managers. Posted by JIMinNC.

Jim, well said.  I think many owners are afraid of what will happen if they choose to ask for competing bids from other management companies.  What other choices do you have?  Do you become an independent resort?  Do you ask Hilton or Westin to take over?  Are they any better?

The point that owners miss in this discussion is that Marriott Vacation Club has no company without these resorts.  Marriott did a good job for many years keeping cost increases below rental rate increases.  However, their desire to grow earnings and please their investors may have surpassed keeping their customers happy.  If owners are not willing to force Marriott to the table by a willingness to leave Marriott, then Marriott will continue to take advantage of us.  

I think it is time to start a new thread.  When should owners fire Marriott?  

Good discussion.


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## RLS50 (May 16, 2016)

JIMinNC said:


> Thinking about our family budget, the only thing I can say that hasn't gone up in price over the last few years is gasoline/natural gas. My wife says her food costs are up; I know our landline and cell phone bills are higher; our cable bill is higher; prices at the restaurants we frequent are noticeably higher; the landscape company that handles our lawn maintenance and our pest control company increase prices every year supposedly due to 'increased labor costs;" I can't seem to get cheap air fares any more; as I noted in a post above, hotel costs are up; our health insurance costs more; even the place I get my hair cut has upped the price from $12 to $13. Fortunately, our incomes have so far more than kept up, but inflation seems more than nominal to me.
> 
> I can't reconcile the divergence between what I see every day and the stated inflation rate and central bank/Fed policies which, as you say, seem to be concerned about deflation. Janet Yellen knows a lot more about the economy and what's going on than I do, so I can't explain the divergence in perception, but the statements made by RLS50 resonate more with my personal experience. I guess that's why the idea of 3% to 5% inflation of maintenance fees doesn't seem excessive to me.


Our experience with general cost increases across the board are similar to yours.   Ironically energy costs didn't impact us the way they could have because we switched to a high efficiency gas boiler from an oil boiler at just the right time (dumb luck).

As far as the increase in MF's, they do track real inflation rates pretty closely.  Some of it may be justified no doubt, but I know some of it is trying to appease shareholders of the underlying stock...trying to serve 2 masters so to speak.

But as I have stated a few times, justified or not, I do not believe that level of annual increase is sustainable without corresponding increases in underlying wage growth...which has been largely missing nationally for the last 7 years.  At some point either wage growth has to return to normalized levels or MF's are going to become a much bigger problem than they may be today.

Either way, I find the topic interesting and appreciate all the different viewpoints.


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## JIMinNC (May 16, 2016)

bw3 said:


> In the final analysis, perhaps that lock that the hotel-affiliated management companies have on the management contract because of the brand affiliation means the BOD has no real leverage to force cost containment while still keeping standards high - there's basically no competition for the management contract and the BOD can't change managers. Posted by JIMinNC.
> 
> Jim, well said.  I think many owners are afraid of what will happen if they choose to ask for competing bids from other management companies.  What other choices do you have?  Do you become an independent resort?  Do you ask Hilton or Westin to take over?  Are they any better?
> 
> ...



When should owners fire Marriott? In my opinion there are few, if any, circumstances where that would be a viable path. Perhaps if Marriott began behaving like the DRI example I mentioned in post #22, but even then, that would be a tough decision for any HOA to make.

The facts are, most people bought into Marriott Vacation Club because of the entirety of the MVC network, the affiliation with Marriott Rewards, the DC Points system, the resort quality, etc, etc. Losing that would be unacceptable for many/most owners - I know it would be for me. I have no interest in just owning an independent resort, losing the DC Points program, etc. Joining up with other hotel-afilliated networks (if that were even possible) would likely present many of the same issues with the new manager, so not sure what that would really accomplish.

I think the information I posted in posts #61 and #62 would seem to indicate that the upward trend in maintenance fees does not directly translate to boosting Marriott earnings to a significant extent, except to the degree that increased maintenance fee billings marginally increase the Management Fee. So I do not see that Marriott is taking advantage of owners in any significant way to boost shareholders. Yes, they have to keep Wall Street happy, but I don't see that they are abusing owners to accomplish that goal. Compared to my past experience with DRI, Marriott is very owner-friendly.

As I've said in other posts, while anyone would rather have flat maintenance fees, I do not consider 3% to 5% increases being "taken advantage of." Given the size of the MVC network, the DC Points program, and the overall quality of the MVC resorts, keeping the brand and the network is, to me, a much higher priority than smaller maintenance fee increases.


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## JIMinNC (May 16, 2016)

RLS50 said:


> But as I have stated a few times, justified or not, I do not believe that level of annual increase is sustainable without corresponding increases in underlying wage growth...which has been largely missing nationally for the last 7 years.



It's actually a lot longer than 7 years. As you can see from the linked chart below, if you click on the "MAX" tab to get data all the way back to the 1960s, you can see that wage growth rates have been on a general downward trajectory since about 1980 (setting lower lows and lower highs in the up and down cycles). Wage growth actually went negative during the 2001-2002 recession, went very negative during the 2008 Great Recession, and began recovery in early-mid 2009. The generally positive trends over the last 7 years now have us back at levels that roughly approximate the early to mid-1990s, but we haven't quite yet got back to the levels of the mid-to-late 1990s - which were still below what we saw prior to the early 1980s.

http://www.tradingeconomics.com/united-states/wage-growth


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## WBP (May 16, 2016)

bw3 said:


> In the final analysis, perhaps that lock that the hotel-affiliated management companies have on the management contract because of the brand affiliation means the BOD has no real leverage to force cost containment while still keeping standards high - there's basically no competition for the management contract and the BOD can't change managers. Posted by JIMinNC.
> 
> Jim, well said.  I think many owners are afraid of what will happen if they choose to ask for competing bids from other management companies.  What other choices do you have?  Do you become an independent resort?  Do you ask Hilton or Westin to take over?  Are they any better?
> 
> ...



The owners/HOA can force a change of management companies (two buildings at StreamSide at Vail come to mind, as having done that). Over the past few years, several Ritz-Carlton Clubs (managed by MVCI dba The Ritz-Carlton Club) were replaced by The Timbers Club at Bachelor Gulch, and Trump in Jupiter. 

However, in my opinion, we, and I suspect many Marriott owners, bought into Marriott Vacation Club because of our high regard for Marriott and Marriott service and quality. So, in my opinion, if Marriott is not performing to your satisfaction or expectations, that is an issue that should be bumped up to your Homeowners Association Board of Directors. There is power in numbers; the more owners who express their issues with Marriott's performance to the HOA BOD, the more likely they are to take action. In my experience, I have found Marriott responsive to reasonable requests, and if they don't like the demands that are placed on them by the HOA BOD, they (Marriott) can walk away from the management agreement (if my memory is right, Marriott did just that at several Sea Pines (HHI) properties (Spicebush and Swallowtail), Bahamas, Longboat Key, Barbados, and Loon, NH, to name a few).


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## BJRSanDiego (May 17, 2016)

wuv pooh said:


> GMs that I have spoken to say the biggest cost is labor, especially housekeeping.  It is not possible to hire people in resort areas that are willing to work for $8 an hour.  Raising that to $10 is a 25% increase, about 10 years of "normal" inflation.  Raising it to $12 or $15...
> 
> Most of the staff on Hilton Head comes from off island as much as an hour+ away where they can afford to live.  Staff in Orlando are interns in the hospitality program at UCF, etc.
> 
> Hard to find low wage people for hard work in expensive resort COL areas.



I wonder what the average per-hour rate is for housekeepers.  If it is close to $10 per hour, I would expect that the MF will take a hit if the national pressure results in increasing the minimum rate to $15 per hour.  An unintended consequence of raising the minimum hourly rate to $15 p.h. may be more jobs that are automated and which disappear (remember people who pumped gas, who were not computer-automated telephone answerers, who ran the elevators, and the days when there weren't automatic (non-human) check-out registers?).

If the rate for housekeeping is closer to $15, maybe there won't be a lot of impact.  Automating housekeeping would be a challenge to automate.  Unless they made us timeshare travelers take out our own garbage, wash our dishes, etc.  I am seeing more places where we are given pool towels and are now required to wash them ourselves during the week.  Also, the mid-week cleanups seem to be going away....

Sorry for the ramble...


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## Saintsfanfl (May 17, 2016)

Inflation has not been 4%-6% for the last few years. Not even close. I am talking US inflation here. Worldwide inflation is meaningless. You have to look at each country separately. US inflation has been an average of about 1.25% since from 2009 through last year (2009 was negative and last year was about zero).


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## RLS50 (May 17, 2016)

Saintsfanfl said:


> Inflation has not been 4%-6% for the last few years. Not even close. I am talking US inflation here. Worldwide inflation is meaningless. You have to look at each country separately. US inflation has been an average of about 1.25% since from 2009 through last year (2009 was negative and last year was about zero).


This topic is always controversial for some reason, so disagreement is not new or surprising.  

Many disagree with the "official" CPI position that inflation is under control, if non-existent.  This is only possible because the way the CPI report is calculated has changed multiple times since the Reagan administration.  

I'll just leave it at this...it is virtually mathematically impossible that real inflation was only 1.25% when money supply growth annually since quanitative easing became the defacto policy at the FED has been 3-4 times that at 4%-5%.

http://www.forbes.com/sites/periann...lation-dont-bother-with-the-cpi/#453d3caa118b

Again, I am not making a political statement, nor am I attempting to criticize anyone or suggest it is the wrong path.   That is another topic or debate I have no interest in engaging in.   I am merely speaking to simple math and world history.   Real inflation (that impacts real people) almost always tracks very closely the increase in underlying fiat currency.

The relevance in this thread was not an attempt by me to defend nor criticize the Marriott MF increases.  I was merely observing that the annual increase in Marriott MF's (4%-5%) has closely tracked the increase in the money supply (devaluation rate of the underlying currency) and that is close to the real, true inflation rate.   

Even though I suspect the average Marriott customer that can afford one or multiple timeshares at $1300 to $1800 per year in MF's, does not represent the average American household income.   I can't prove it, but I suspect the average Marriott customer has a higher than average household income and is less sensitive to the money supply growth than probably 80% of the rest of American households.


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## SMHarman (May 17, 2016)

Saintsfanfl said:


> Inflation has not been 4%-6% for the last few years. Not even close. I am talking US inflation here. Worldwide inflation is meaningless. You have to look at each country separately. US inflation has been an average of about 1.25% since from 2009 through last year (2009 was negative and last year was about zero).


The lack of wage inflation has held iinflation down. Other items have gone up.


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## Saintsfanfl (May 17, 2016)

SMHarman said:


> The lack of wage inflation has held iinflation down. Other items have gone up.



Nope. The inflation rates I quoted are based on CPI. Wage inflation is not a component of the CPI.


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## Saintsfanfl (May 17, 2016)

RLS50 said:


> I'll just leave it at this...it is virtually mathematically impossible that real inflation was only 1.25% when money supply growth annually since quanitative easing became the defacto policy at the FED has been 3-4 times that at 4%-5%.



You are confusing one aspect of the economy with another. The prices of goods and services is what is relevant, not the money supply.

I do not believe the actual cost of the goods and services spent by a timeshare is actually going up as fast as the overall maintenance fee is going up. I just don't think most people thoroughly understand everything behind the annual fee amount and how those costs are being managed or mismanaged.


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## RLS50 (May 17, 2016)

Saintsfanfl said:


> You are confusing one aspect of the economy with another. The prices of goods and services is what is relevant, not the money supply.
> 
> I do not believe the actual cost of the goods and services spent by a timeshare is actually going up as fast as the overall maintenance fee is going up. I just don't think most people thoroughly understand everything behind the annual fee amount and how those costs are being managed or mismanaged.


This is what makes this thread sort of difficult, there is no one right or wrong answer.

I respectfully disagree with you on paragraph 1.  I would argue, with many examples from well known economists that money supply growth will almost always cause a corresponding increase in at least some goods and services...even if not in all of them equally.   But we can agree to disagree on that.

But to the main point of this thread, I generally agree with you on your comment in paragraph 2.  I merely found it interesting that Marriott MF's are going up at the same annual percentage rate the currency is being (hypothetically) devalued by increases to money supply.

That does not mean I think Marriott has justification for these increases, and I suspect at least part of the increase is related to trying to appease shareholders, which can have a very different agenda than the average Marriott timeshare owner.   As a public company Marriott has to serve 2 masters.

The only defense I will offer of Marriott (and think I understand JiminNC's point) is that I think they are still probably the best (on a relative scale to their peers) at delivering value for each dollar spent.  That doesn't mean Marriott isn't overcharging owners, or raising fees too fast, even if slightly.

It just means to me for example, I am much more comfortable paying Marriott $1300 per year for annual MF's than I am paying a company like say DRI (the example also mentioned by others) the same amount.  I think an owner gets better relative support, better relative service, and better relative properties at Marriott once you get into the "luxury" ballpark of annal MF fees.   Or let me qualify that and say I think Marriott and Westin are close, with maybe Hilton and Disney in the same ballpark among the big corporate timeshare management chains.

I think even the format here in TUG suggests most probably view the pecking order close to that?

Anyway I always enjoy and respect the different viewpoints, even if they may not align exactly with mine.


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## Saintsfanfl (May 17, 2016)

RLS50 said:


> That does not mean I think Marriott has justification for these increases, and I suspect at least part of the increase is related to trying to appease shareholders, which can have a very different agenda than the average Marriott timeshare owner.   As a public company Marriott has to serve 2 masters.



The maintenance fee does not go to the MVCI shareholders, or at least not in whole. The management fee portion I believe is a percentage, probably 10%, but it would be difficult to increase the whole just to justify the increase in management fee. Excluding the management fee every dollar should be accounted for and solely belongs to the property expenses and reserves.

What properties fully fund reserves? Not many I suspect. Beach Place voted to do it not long ago and it resulted in a huge increase in the fee. 

Pay for it now, pay for it later, or start increasing now to pay for it over time. If the HOA waits too long it will be too late. Many timeshares are now disbanding once they get to the point where the replacement and renovation costs so far exceed the capabilities of the reserves. 

At least Marriott does a very good job of keeping the properties in good shape but they were and still are under funding reserves at many properties.


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## Saintsfanfl (May 17, 2016)

Another problem which I know has been brought up before is the owner's direct say in the budget. A neighborhood or condo HOA is almost always going to bargain in the best collective interest of the owners. This is not the case with many timeshare HOAs. It is really easy for a developer controlled HOA to say "spend an extra $1k for that" when it is not their money being spent. On the flip side spending an extra $1k increases their management fee by $100 so there is a conflict of interest so this reinforces your point that maybe decisions are made with shareholder's in mind. I don't think Marriott is doing this though. They are making plenty of money without extra manipulation. 

It should not be legal for a developer to control an HOA.


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## JIMinNC (May 17, 2016)

Saintsfanfl said:


> Inflation has not been 4%-6% for the last few years. Not even close. I am talking US inflation here. Worldwide inflation is meaningless. You have to look at each country separately. US inflation has been an average of about 1.25% since from 2009 through last year (2009 was negative and last year was about zero).



You have to remember that the CPI is just an artificial statistic created by an economist sometime in the past as an attempt to accurately measure inflation trends. There are a number of schools of thought in economics that believe that the CPI is not an accurate measure of true inflation. That is the point that RLS50 is trying to make, I believe.

A natural, physical property like air temperature can be empirically, scientifically measured and proven. But a statistic like the CPI is, by nature, somewhat arbitrary. It's simply an artificial index, created to measure something that cannot be scientifically measured. Yes, the CPI is based on rational, logical economic theory, but there has always been debate among economists as to how accurately it truly reflects "real" inflation. That's one reason it's been adjusted and tweaked over the years - as inflation theory evolves and the economy changes.



Saintsfanfl said:


> Nope. The inflation rates I quoted are based on CPI. Wage inflation is not a component of the CPI.



Correct, the CPI calculation looks only at prices, not costs like wages. But...if labor costs go up, labor intensive businesses will try to raise prices to maintain their profit margins. So if employment costs/wages rise, it should translate into higher prices and an increase in the CPI over time. So while the CPI itself does not directly use wages in the calculation, wage growth would be expected to cause the CPI to rise, and flat wages would serve to moderate CPI increases.



Saintsfanfl said:


> You are confusing one aspect of the economy with another. The prices of goods and services is what is relevant, not the money supply.



True to an extent, but as I noted just above, the CPI is just a statistic. Macroeconomic theory says that if the money supply rises X%, and production capacity stays constant, then prices should rise a corresponding %. In fact, it's more complicated than that (see LINK), but there are economists who fall into the camp that the CPI is not as good of a measure as the money supply.



Saintsfanfl said:


> I do not believe the actual cost of the goods and services spent by a timeshare is actually going up as fast as the overall maintenance fee is going up. I just don't think most people thoroughly understand everything behind the annual fee amount and how those costs are being managed or mismanaged.



If MF revenue is going up faster than costs, then that "extra profit" has to be going to someone. Where is it going? It's not going to VAC's bottom line because as I noted in post #62, the audited financial statements for VAC show that the HOAs reimburse VAC for the costs VAC incurs in support of the HOAs, and these reimbursements "consist of actual expenses with no added margin." The profit VAC earns from resort management is contained within the Management Fee (which typically rises in line with expenses, by contract) and in the other revenue based services offered to guests.

It is possible, maybe even likely, that expenses are not being managed as tightly as they could be, but I've seen no evidence that VAC is profiting off of rising maintenance fees, except to the extent that the Management Fee rises proportionally with the underlying costs that determine the amount of the MF.


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## Saintsfanfl (May 17, 2016)

BJRSanDiego said:


> I wonder what the average per-hour rate is for housekeepers.  If it is close to $10 per hour, I would expect that the MF will take a hit if the national pressure results in increasing the minimum rate to $15 per hour.  An unintended consequence of raising the minimum hourly rate to $15 p.h. may be more jobs that are automated and which disappear (remember people who pumped gas, who were not computer-automated telephone answerers, who ran the elevators, and the days when there weren't automatic (non-human) check-out registers?).
> 
> If the rate for housekeeping is closer to $15, maybe there won't be a lot of impact.  Automating housekeeping would be a challenge to automate.  Unless they made us timeshare travelers take out our own garbage, wash our dishes, etc.  I am seeing more places where we are given pool towels and are now required to wash them ourselves during the week.  Also, the mid-week cleanups seem to be going away....
> 
> Sorry for the ramble...



Almost all if not all Marriott timeshares outsource the housekeeping work to a service. This results in hourly fees higher than if they hired them direct due to the markup but direct hiring would have it's own set of problems.

There is a good chance that not all of the workers hired through these services are legal but they are most likely earning at least min wage. I encountered the owner of the service that cleans Cypress Harbour. Single owner and very unprofessional.


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## Saintsfanfl (May 17, 2016)

JIMinNC said:


> If MF revenue is going up faster than costs, then that "extra profit" has to be going to someone. Where is it going? It's not going to VAC's bottom line because as I noted in post #62, the audited financial statements for VAC show that the HOAs reimburse VAC for the costs VAC incurs in support of the HOAs, and these reimbursements "consist of actual expenses with no added margin." The profit VAC earns from resort management is contained within the Management Fee (which typically rises in line with expenses, by contract) and in the other revenue based services offered to guests.
> 
> It is possible, maybe even likely, that expenses are not being managed as tightly as they could be, but I've seen no evidence that VAC is profiting off of rising maintenance fees, except to the extent that the Management Fee rises proportionally with the underlying costs that determine the amount of the MF.



Hopefully it is going to reserves, but it is also very easy to "spend" when you have no skin in the game.


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## JIMinNC (May 17, 2016)

Saintsfanfl said:


> Another problem which I know has been brought up before is the owner's direct say in the budget. A neighborhood or condo HOA is almost always going to bargain in the best collective interest of the owners. This is not the case with many timeshare HOAs. It is really easy for a developer controlled HOA to say "spend an extra $1k for that" when it is not their money being spent. On the flip side spending an extra $1k increases their management fee by $100 so there is a conflict of interest so this reinforces your point that maybe decisions are made with shareholder's in mind. I don't think Marriott is doing this though. They are making plenty of money without extra manipulation.
> 
> It should not be legal for a developer to control an HOA.



This is the biggest question in my mind, and it's something I've asked in a couple of other posts in this thread, but no one has yet offered any other thoughts.

Does Marriott really "control" most of their HOAs? Based on the BOD elections at Barony Beach Club, the candidates all appear to be owners with no obvious connection to Marriott Vacations Worldwide or Marriott International. So based on this fact alone, I would say Marriott does not directly control the Barony HOA. This is unlike DRI's Kaanapali Beach Club where a majority of the BOD are DRI insiders.

Granted, the power of the Marriott brand/network and the incentive that gives HOAs to keep the Marriott affiliation exerts strong indirect control over the HOA boards, so it may not be necessary for Marriott to actually "control" the boards.

And Marriott's management contract at Barony does stipulate that the Management Fee is 10% of the maintenance fee collections (exclusive of the Management Fee itself). So while I don't think they improperly inflate or pad expenses - they do have to be audited after all - their incentives are not tilted to tight expense control. The only check and balance is whatever pressure the BOD can put on them to manage expenses carefully.


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## Saintsfanfl (May 17, 2016)

The older Marriott resorts are likely controlled by the owners but that doesn't mean that Marriott does not want to control it or is not slowly gaining more control. Barony has a very small trust ownership. The resorts that have a higher percentage of trust ownership are going to be more apt to be controlled by Marriott. Oceana Palms and Crystal Shores are majority controlled by the trust so with those properties Marriott would hold the only vote that counts.


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## Superchief (May 17, 2016)

Saintsfanfl said:


> The older Marriott resorts are likely controlled by the owners but that doesn't mean that Marriott does not want to control it or is not slowly gaining more control. Barony has a very small trust ownership. The resorts that have a higher percentage of trust ownership are going to be more apt to be controlled by Marriott. Oceana Palms and Crystal Shores are majority controlled by the trust so with those properties Marriott would hold the only vote that counts.



I am curious regarding the impact of trust control over the makeup of the BOD. As MVC adds more ownership to the trust, do they start gaining more control over the BOD? How does the trust ownership impact BOD elections? Does MVC get to appoint a number of BOD members based on their ownership level, or do they get a percentage of votes to allocate to the same BOD candidates that owners are voting for?


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## JIMinNC (May 17, 2016)

Saintsfanfl said:


> The older Marriott resorts are likely controlled by the owners but that doesn't mean that Marriott does not want to control it or is not slowly gaining more control. Barony has a very small trust ownership. The resorts that have a higher percentage of trust ownership are going to be more apt to be controlled by Marriott. Oceana Palms and Crystal Shores are majority controlled by the trust so with those properties Marriott would hold the only vote that counts.



So what is the BOD makeup at places like Oceana Palms and Crystal Shores where the Trust can effectively vote whomever they want to vote onto the board? Are the BOD members just regular owners that the Trust approves of, or are they actual Marriott insiders or employees as was the case with my DRI experience?


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## Saintsfanfl (May 17, 2016)

Superchief said:


> I am curious regarding the impact of trust control over the makeup of the BOD. As MVC adds more ownership to the trust, do they start gaining more control over the BOD? How does the trust ownership impact BOD elections? Does MVC get to appoint a number of BOD members based on their ownership level, or do they get a percentage of votes to allocate to the same BOD candidates that owners are voting for?



Unless the definition of a trust has different rules they would have the control over the entire BOD. There is no allocation of control based on percentage of ownership. It comes down to votes and since they control more than 50% their vote is going to count 100% towards electing the BOD.

I am pretty sure that Marriott does elect insiders at properties that they have control over.


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## JIMinNC (May 17, 2016)

Superchief said:


> I am curious regarding the impact of trust control over the makeup of the BOD. As MVC adds more ownership to the trust, do they start gaining more control over the BOD? How does the trust ownership impact BOD elections? Does MVC get to appoint a number of BOD members based on their ownership level, or do they get a percentage of votes to allocate to the same BOD candidates that owners are voting for?



The way I think it works is the Trust as an owner must abide by the same HOA bylaws and gets to vote just like other owners do. So if the Trust owns 5% of the intervals at a given resort, they get 5% of the votes and can vote for whichever candidates they want to. So if the Trust controls 51% or greater of the intervals at a resort, they block vote those for the favored candidate and basically can vote whomever they want onto the BOD.

Depending on the number of candidates running, they might even be able to get their way with considerably less than 51% ownership. Director election is usually based on a plurality of votes, not a majority. So if there are a lot of candidates running and just two seats up for election, if the Trust block votes for their two candidates and the rest of the owners split their votes amongst random other candidates, the candidates supported by the Trust are usually guaranteed to win a plurality. That is how DRI easily kept control of the Kaanapali Beach Club BOD - any owner could put their name in the hat for election, so there would often be 20 or more candidates for two or three seats. DRI would vote for their employees using the intervals they owned through their trust. There was a requirement in the bylaws, as I recall, that at least one director be an independent owner, so DRI picked their favorite and also block voted for that person. For a while there was an independent owner who actively campaigned for votes from owners and he was successful in getting enough votes to get on the BOD, but he finally gave up fighting DRI as I recall.


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## Saintsfanfl (May 17, 2016)

JIMinNC said:


> Depending on the number of candidates running, they might even be able to get their way with considerably less than 51% ownership.



Definitely. Many owners will not show up and will not fill out their proxy. The Marriott trust vote on the other hand will always show up and vote so they do not need even close to majority trust ownership to control the BOD vote.


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## suzannesimon (May 17, 2016)

bw3 said:


> In the final analysis, perhaps that lock that the hotel-affiliated management companies have on the management contract because of the brand affiliation means the BOD has no real leverage to force cost containment while still keeping standards high - there's basically no competition for the management contract and the BOD can't change managers. Posted by JIMinNC.
> 
> Jim, well said.  I think many owners are afraid of what will happen if they choose to ask for competing bids from other management companies.  What other choices do you have?  Do you become an independent resort?  Do you ask Hilton or Westin to take over?  Are they any better?
> 
> ...



I, for one, have zero interest in owning in an independent resort.  Yes, our maintenance fees are higher than most independents, but we can also rent our weeks for at least the same or more than our fees.  We can usually sell them as well, usually at a loss, but at least we can get rid of them.  There is a benefit to owning a name-brand resort.  That's what exchangers want to trade into, renters want to rent and buyers want to buy.   I would never vote to get rid of Marriott unless it would be replaced by another hotel brand.  Just my 2 cents.


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## JIMinNC (May 17, 2016)

suzannesimon said:


> I, for one, have zero interest in owning in an independent resort.  Yes, our maintenance fees are higher than most independents, but we can also rent our weeks for at least the same or more than our fees.  We can usually sell them as well, usually at a loss, but at least we can get rid of them.  There is a benefit to owning a name-brand resort.  That's what exchangers want to trade into, renters want to rent and buyers want to buy.   I would never vote to get rid of Marriott unless it would be replaced by another hotel brand.  Just my 2 cents.



My sentiments exactly - but for slightly different reasons. I have no desire to rent my timeshare ownership, but I do value the brand on the sign because it means that as long as that brand is on the door, the quality of the resort and the amenities must meet Marriott standards. Yes, that will cost me more, and maybe my fees might go up a little faster, but I think the trade-off is well worth it to ensure that my vacations are in top-quality resorts.


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## Saintsfanfl (May 17, 2016)

suzannesimon said:


> I, for one, have zero interest in owning in an independent resort.  Yes, our maintenance fees are higher than most independents, but we can also rent our weeks for at least the same or more than our fees.  We can usually sell them as well, usually at a loss, but at least we can get rid of them.  There is a benefit to owning a name-brand resort.  That's what exchangers want to trade into, renters want to rent and buyers want to buy.   I would never vote to get rid of Marriott unless it would be replaced by another hotel brand.  Just my 2 cents.



What you are describing doesn't really have anything to do with Marriott vs independent. I am a Marriott owner but I also own at an independent that is very easy to rent at a profit or resell. Also, there are many, many Marriott weeks that cannot be rented at or higher than the fees. You own at HHI but what about trying to rent out a bronze or silver week? They can easily be rented for half the fees or traded into with a unit that has a $300 fee. I would say that at least half the Marriott weeks would have a very difficult time renting for the fees or higher.

The good independents out there will not be for everyone but they can have great value and are run properly with the owners in mind. The good Marriott units do have great value because the fee is the same as for the dog weeks. I like a bit of both.


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## suzannesimon (May 17, 2016)

Saintsfanfl said:


> What you are describing doesn't really have anything to do with Marriott vs independent. I am a Marriott owner but I also own at an independent that is very easy to rent at a profit or resell. Also, there are many, many Marriott weeks that cannot be rented at or higher than the fees. You own at HHI but what about trying to rent out a bronze or silver week? They can easily be rented for half the fees or traded into with a unit that has a $300 fee. I would say that at least half the Marriott weeks would have a very difficult time renting for the fees or higher.
> 
> The good independents out there will not be for everyone but they can have great value and are run properly with the owners in mind. The good Marriott units do have great value because the fee is the same as for the dog weeks. I like a bit of both.


Well, yes, you do have to be intentional in what you are buying.  Many resorts, name brand or not, have 50% of their weeks during seasons that no one wants to go.  There are good, popular independents but I also like the name-brand standard because you know what you are getting before you walk in the door.  If I'm unfamiliar with the resort and have a choice, I'll pick the hotel-brand because it reduces the chance of nasty surprises.  I feel the same way about hotels - I'll pick Motel 6 over the Bates Motel every time because I know what I'm getting.


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## BocaBoy (May 17, 2016)

RLS50 said:


> Yes, fuel has gone up.  Only recently has it dropped in the last 12 months...*but even today it is higher in inflation adjusted rates then it has been in decades previously.*
> 
> 
> > I do not buy this point.  In the early 1980's, I was paying about $1.50 for gas.  Today it is a little over $2.00.  Your point is true if you go back to the early 70's, but that is not the time period we are talking about.
> ...


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## BocaBoy (May 17, 2016)

RLS50 said:


> Boca,
> 
> Believe it or not, I think I am closer to your position on this topic than you might think.


I think that is true, actually.


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## SueDonJ (May 17, 2016)

suzannesimon said:


> I, for one, have zero interest in owning in an independent resort.  Yes, our maintenance fees are higher than most independents, but we can also rent our weeks for at least the same or more than our fees.  We can usually sell them as well, usually at a loss, but at least we can get rid of them.  There is a benefit to owning a name-brand resort.  That's what exchangers want to trade into, renters want to rent and buyers want to buy.   I would never vote to get rid of Marriott unless it would be replaced by another hotel brand.  Just my 2 cents.





JIMinNC said:


> My sentiments exactly - but for slightly different reasons. I have no desire to rent my timeshare ownership, but I do value the brand on the sign because it means that as long as that brand is on the door, the quality of the resort and the amenities must meet Marriott standards. Yes, that will cost me more, and maybe my fees might go up a little faster, but I think the trade-off is well worth it to ensure that my vacations are in top-quality resorts.



I agree with the general idea here, that I have no interest in challenging MVW's oversight to the point that they'll choose to walk away from the management contract at the first opportunity.  As others have mentioned, it's happened before and it'll happen again if a majority ownership at any resort puts up enough of a challenge to MVW's brand- or management style-standard.

The way I understand things, MVW has significant influence - if not actual control - over the preliminary budgets and the onsite vendors at each resort for housekeeping, maintenance, refurbishment, etc.  The individual resort boards are given some limited leeway to review the prelim budgets and/or suggest local options that may satisfy MVW's standards, but on the whole that leeway doesn't extend very far.  The one example I always use is from a few years ago at SurfWatch - MVW's standard called for the tv's to be upgraded to the same ones being installed in many of the resorts system-wide but they didn't fit in the existing cabinets, so MVW's refurb plan included all new cabinets at a cost of something like $600-$800 per.  The board was able to find a local contractor who could refurb the existing cabinets at a cost of $100 per, removing the upper hutch section and leaving a nice piece of furniture on which the tv would sit.  MVW approved that board recommendation but if they hadn't there's not much the board could do about it, and it's doubtful that MVW would allow every budget line-item to be debated.

I agree with Boca that it's "suspicious" how every year the budgets increase generally 3-5%, resulting in MVW's management fee (which is 10% of the budgets at US/Caribbean resorts and slightly higher at the Euro resorts) increasing that same 3-5%.  I'm sure there's a deliberate effort to make that happen but nothing so nefarious that anyone could accuse MVW of blatant mismanagement.  As long as there's nothing blatant, I figure the steady increases are "the price of doing business" - when it gets to the point where I'm more unhappy about MVW's management than I am happy about my ownership, that'll be the time to get out.

In all the years I've been on TUG folks have mentioned the metric of new resorts being deliberately underfunded at MVCI/MVW's direction in order to make the new resorts attractive in the sales galleries.  That just hasn't been our experience and we bought SW during the construction phase.  The reserves have always been properly funded for later 5- and 10-year refurbs, and there's never been a glaring item in the budgets that proved this metric.  SW has always had a healthy budget.  <shrug>

This is always an interesting discussion; I love reading all the different perspectives.


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## BocaBoy (May 17, 2016)

Five years ago we owned seven Marriott timeshares and paid close to $8000 in annual maintenance fees.  That was too much so we decided to sell a couple weeks to cut those fees in half, or close to it.  Now we own only two weeks and still pay close to $4500 annually.  When we sell a week the increases in the remaining weeks take up a lot of the savings.  We are now contemplating selling another week and getting down to only one remaining week.  The motivation for the most recent sales has been the wildly out of control maintenance fees for the past 8-10 years.  I am afraid that if we do not sell again soon, the value of what we have left will dramatically decrease further.  It makes us realize how much we miss cruising every year.


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## Superchief (May 17, 2016)

JIMinNC said:


> So what is the BOD makeup at places like Oceana Palms and Crystal Shores where the Trust can effectively vote whomever they want to vote onto the board? Are the BOD members just regular owners that the Trust approves of, or are they actual Marriott insiders or employees as was the case with my DRI experience?



I own at Oceana Palms and noticed that our BOD options were more limited than my other MVC resorts. However, I've been very happy with the management decisions and cost controls over the past few years. The GM, Chris Cano, is very good and appears to truly care about owners and employees. I've been less impressed with BOD decisions and MF increases at Canyon Villas and Mountainside.


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## dioxide45 (May 17, 2016)

MVW needs to show investors income growth. Since sales are flat or down right now, the easiest pickings for that is to increase MFs, thus also increasing their management fee. It doesn't cost them significantly more to manage the resorts from one year to the next. All other costs associated with running the resort and even the reservations system are paid for out of other line items on the MF budget. So the management fee is just about as close to pure profit as you can get.

I would suspect that at most resorts, the GM and MVW present an estimated budget to the BOD for review. Even though members of the BOD may not be VAC employees, it doesn't mean that they aren't sympathetic or in VAC's pocket. I recall some meeting minutes for Grande Vista a few years ago where they got several bids from different suppliers, one of which was Marriott Renovations Services. Of course Marriott Renovations Services was not the cheapest option, but it was a battle on the board to make sure the bid went to Marriott Renovations Services. Perhaps it was possible that Marriott Renovations Services was the better option, but from reading the minutes, there were certain board members that were not open to other options.

Marriott is making money off of the MFs from sources other than just the management fee. They make profit from services rendered by Marriott Renovations Services for renovations. There may be other line items on the budget that are going to vendors that MVW has outsourced those services to. Perhaps MVW has built in an "administrative fee" to that cost, just adding to their bottom line. Marriott has more ways to get in our pocket than just the Management Fee.


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## WBP (May 18, 2016)

SueDonJ said:


> I agree with the general idea here, that I have no interest in challenging MVW's oversight to the point that they'll choose to walk away from the management contract at the first opportunity.  As others have mentioned, it's happened before and it'll happen again if a majority ownership at any resort puts up enough of a challenge to MVW's brand- or management style-standard.
> 
> The way I understand things, MVW has significant influence - if not actual control - over the preliminary budgets and the onsite vendors at each resort for housekeeping, maintenance, refurbishment, etc.  The individual resort boards are given some limited leeway to review the prelim budgets and/or suggest local options that may satisfy MVW's standards, but on the whole that leeway doesn't extend very far.  The one example I always use is from a few years ago at SurfWatch - MVW's standard called for the tv's to be upgraded to the same ones being installed in many of the resorts system-wide but they didn't fit in the existing cabinets, so MVW's refurb plan included all new cabinets at a cost of something like $600-$800 per.  The board was able to find a local contractor who could refurb the existing cabinets at a cost of $100 per, removing the upper hutch section and leaving a nice piece of furniture on which the tv would sit.  MVW approved that board recommendation but if they hadn't there's not much the board could do about it, and it's doubtful that MVW would allow every budget line-item to be debated.
> 
> ...



Regarding the "Developer Subsidy," at new MVCI resorts, the Conspiracy Theorists would lead you to believe that that is a blatant act of deception by Marriott to misrepresent the actual timeshare week owner's cost to operate and subsidize the reserves of a resort. When, in fact, the truth is that the Developer Subsidy is exercised by Marriott when the balance of inventory is heavily weighted towards Marriott (and a number of other causes that prompt Marriott to "step up to the plate, financially").

With all of the typed words on this topic in this forum, I wonder how many of those whose fingers do the walking on their key pads on TUG, reduce their mouths, fingers and keypads to communicate directly with their HOA Boards about their concerns over their maintenance fees, serve on Marriott HOA Boards, or volunteer on committees of Marriott HOA Boards? I'd speculate that that would be a more effective way to influence change than the mud-slinging on this board. Further, if a Marriott HOA Board can not quantify the groundswell amongst owners over an issue, they are devoid of an important basis to shape their agenda/business plan.


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## MALC9990 (May 18, 2016)

JIMinNC said:


> I'm not sure what a HOPA document is. Is it some kind of disclosure document used in Europe?
> 
> Here in the U.S. we have disclosure documents also, the main one is what is called a "Public Offering Statement" that contains HOA association by-laws, the details of the real estate, resort management, exchange procedures, booking procedures, etc.
> 
> No where in our documents is there any language referencing the CPI or in any way limiting the amount that maintenance fees can increase. In fact, the legal documents for every U.S. timeshare that I am aware of says the BOD has total discretion to set the maintenance fee based solely on the costs of operating the resort. There are no limitations on increases whatsoever.



Jim, you have identified an essential difference between US resorts and those in Europe and Thailand. I own at all 3 Spanish Resorts and also in Thailand. Legislation in Spain and Thailand means there are differences to the USA as far as the Resorts T&Cs are concerned. So there is a requirement that MF increases are constrained by the county inflation rate but not controlled.

Also these resorts do not have a HOA because there are no owners. What we own is a Right to Use and so we have is an Advisory Board of owners of the right to use. My experience in recent years has been that the advisory boards have been active in constraint MF increases but there have been circumstances which have caused above inflation rate Increases in MFs. For example at Son Antem, the resort was integrated with the Marriott Hotel which was part of the original development. The vacation club resort used the hotel front desk service for check in, it used the hotel telephone system, the hotel internet service, the two entities shared security costs. Housekeeping was a shared service as was garden and grounds maintenance, property maintenance etc. the hotel and vacation club was managed by a single Resort Manager with a combined resort management team.

Then in 2014, the hotel property owners fell out with Marriott as the hotel managers. They ended the hotel management contract. As a result the vacation club was hit with some significant costs for, new front desk operation, new telephone system, new internet system, separate housekeeping, full costs of security and the cost of all maintenance for grounds and vacation club properties. These "upfront costs" have been significant which MVCI is helping the resort manage with loans etc but ultimately we "owners" will meet the costs with higher than expected MFs. The owners advisory board members have worked with management to constrain increases in MFs but there is a limit to what they could do.

Incidentally, the change of management at the hotel has been a disaster. The new managers appointed by the owners in 2014 have already walked away at the start of 2016. The second management company is another step down-market and this summer season will probably be a make or break summer for the hotel property owners. 

So we owners are experiencing increase MFs to repay the loans from MVCI to meet the upfrontt costs we had to pay for. These could have been handled with a significant one off assessment but rather they will be managed through increased MFs over the next few years until the loans are paid off. The board does however fight our corner well. Owners such as I do monitor the budget and the actual expenditure and owners do take issue with the board where we see increases that we do not like or understand.

The final advantage is that under the terms of our "ownership" if we fail to pay MFs for two years in a row then our "ownership" is forfeited and MVCI are required to take back the week, pay the outstanding MFs and then can resell the week. Thus "owners" who cannot pay MFs can walk away without a significant impact on their credit rating as long as they do not have a debt for the original purchase which would be with a commercial finance business not MVCI. Also there is no impact on other owners since the bad debts are picked up by MVCI who can then resell the weeks.

Every year I review the new budget, the audited account of the previous year expenditures against last year's budget and look for significant increases and for their explanation. Issues that I do not understand or like I address with my advisory board of owners.


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## SueDonJ (May 18, 2016)

WJS said:


> Regarding the "Developer Subsidy," at new MVCI resorts, the Conspiracy Theorists would lead you to believe that that is a blatant act of deception by Marriott to misrepresent the actual timeshare week owner's cost to operate and subsidize the reserves of a resort. When, in fact, the truth is that the Developer Subsidy is exercised by Marriott when the balance of inventory is heavily weighted towards Marriott (and a number of other causes that prompt Marriott to "step up to the plate, financially"). ...



I hate to see this reduced to just another poppycock subject that gets the (IMO useless) "conspiracy theory" label slapped on it.  For although you're correct in your description of developer subsidies - and DaveM long ago fleshed out this topic on TUG - it's also correct that MVCI/MVW never took the time to explain it to new owners and it's not one of the things that can be readily understood in the governing docs.  Combine that with the fact that there ARE and always have been other timeshares that DO use developer subsidies to artificially prop up new resort budgets, and it's easy to see why the thought process began and flourishes in these types of discussions.



WJS said:


> With all of the typed words on this topic in this forum, I wonder how many of those whose fingers do the walking on their key pads on TUG, reduce their mouths, fingers and keypads to communicate directly with their HOA Boards about their concerns over their maintenance fees, serve on Marriott HOA Boards, or volunteer on committees of Marriott HOA Boards? I'd speculate that that would be a more effective way to influence change than the mud-slinging on this board. Further, if a Marriott HOA Board can not quantify the groundswell amongst owners over an issue, they are devoid of an important basis to shape their agenda/business plan.



As a general rule I'd say TUGgers are a well-rounded group of fairly knowledgeable owners, many of whom try very hard to engage productively with their GM's and boards (despite knowing that it's not always welcomed.)  It's not helpful, again IMO, to reduce the wealth of owner input that MVW can and does glean from this forum, to "mud-slinging."  If this and the other social media forums prove anything, it's that there isn't any one right or wrong way to approach timeshare ownership because we're all looking for something different from it.  Even the most satisfied of owners have constructive criticisms, and I haven't found that Marriott dismisses them out of hand.

Again, you're correct that the GM's and boards can't respond to an issue unless they're aware of it.  I agree that getting more owners involved in direct contact and voting issues would go a long way toward more consensus decisions - but that's a pipe dream.  Some people just want to go on vacation every year and not think about their timeshares anymore than when it's time to pay MF's and book their stays.  Sometimes I envy those people.


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## suzannesimon (May 18, 2016)

Developer subsidies aren't unique to timeshares.  I worked for condo developers for years and managed the associations during the transition from developer to owner-control.  They ALL prop up the associations financially for at least 3 years.  It keeps the fees lower and makes it easier to sell them and get mortgages.  Just like any property, the older it gets, the more expensive it is to maintain, even with reserves.  There is also the increase in having to provide daily housekeeping and front-desk services rather than just 3 or 4 days a week.  Owning real estate of any kind is expensive.


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## BocaBoy (May 18, 2016)

WJS said:


> With all of the typed words on this topic in this forum, I wonder how many of those whose fingers do the walking on their key pads on TUG, reduce their mouths, fingers and keypads to communicate directly with their HOA Boards about their concerns over their maintenance fees, serve on Marriott HOA Boards, or volunteer on committees of Marriott HOA Boards? *I'd speculate that that would be a more effective way to influence change than the mud-slinging on this board. *Further, if a Marriott HOA Board can not quantify the groundswell amongst owners over an issue, they are devoid of an important basis to shape their agenda/business plan.


So one can't have an opinion or discuss an important timeshare issue unless that person is willing to serve on a Board, etc.?  Seems similar to saying that you can't discuss or have an opinion on national issues unless you are willing to run for Congress.  Ans since when is constructive criticism mud-slinging?


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## WBP (May 21, 2016)

BocaBoy said:


> So one can't have an opinion or discuss an important timeshare issue unless that person is willing to serve on a Board, etc.?  Seems similar to saying that you can't discuss or have an opinion on national issues unless you are willing to run for Congress.  Ans since when is constructive criticism mud-slinging?



.....................


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## amycurl (May 22, 2016)

> I, for one, have zero interest in owning in an independent resort. Yes, our maintenance fees are higher than most independents, but we can also rent our weeks for at least the same or more than our fees. We can usually sell them as well, usually at a loss, but at least we can get rid of them. There is a benefit to owning a name-brand resort. That's what exchangers want to trade into, renters want to rent and buyers want to buy. I would never vote to get rid of Marriott unless it would be replaced by another hotel brand. Just my 2 cents.



We can rent our week at our independent resort for at least twice the MF. We can sell it easily, too. Exchangers want what we own, renters want to rent it, and buyers want to buy. All for a MF that is roughly half of a Marriott fee (and, in some locations, roughly a third.) And I really enjoy the Marriotts we've traded into....including Spring Break weeks in HHI and Myrtle Beach. I understand that the brand name is important to some people, but I've found that with timeshares, just like in all real estate, it's location, location, location (along with season, and a *very limited* supply.) 

I hadn't realized that Marriott had been the one to walk away from the management contracts for the two Sea Pines resorts on HHI (I always figured that the resorts fired them.) 

But didn't Villas at Cave Creek fire Starwood just a few years ago? So, while rare for a HOA to fire a hotel-branded management company, it's not unprecedented.


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## JIMinNC (May 23, 2016)

amycurl said:


> We can rent our week at our independent resort for at least twice the MF. We can sell it easily, too. Exchangers want what we own, renters want to rent it, and buyers want to buy. All for a MF that is roughly half of a Marriott fee (and, in some locations, roughly a third.) And I really enjoy the Marriotts we've traded into....including Spring Break weeks in HHI and Myrtle Beach. I understand that the brand name is important to some people, but I've found that with timeshares, just like in all real estate, it's location, location, location (along with season, and a *very limited* supply.)
> 
> I hadn't realized that Marriott had been the one to walk away from the management contracts for the two Sea Pines resorts on HHI (I always figured that the resorts fired them.)
> 
> But didn't Villas at Cave Creek fire Starwood just a few years ago? So, while rare for a HOA to fire a hotel-branded management company, it's not unprecedented.



From my perspective, the most significant advantage of the hotel-based systems versus independents is not rentals. I have no interest whatsoever in that. The advantage is the network. When you buy Marriott you are not buying just one resort, you're buying a network of over 60 properties in the U.S. and internationally, with consistent and outstanding quality and amenities across all of them. That is what makes the higher maintenance fees worth it to me. (And even the higher rate of  fee increases.)


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## bw3 (May 23, 2016)

amycurl said:


> We can rent our week at our independent resort for at least twice the MF.
> 
> I hadn't realized that Marriott had been the one to walk away from the management contracts for the two Sea Pines resorts on HHI (I always figured that the resorts fired them.)
> 
> But didn't Villas at Cave Creek fire Starwood just a few years ago? So, while rare for a HOA to fire a hotel-branded management company, it's not unprecedented.



I was an owner at Swallowtail (HHI) when Marriott decided not to renew the management contract.  Maintenance fees went down about 20% with no loss in service.  It was just a very old property that did not meet the Marriott image.  Spicebush was the other resort that was once managed by Marriott.  They are both smaller resorts.  So a small management company can handle the contract.  I am not sure if local companies would be able to manage a big resort like Grande Ocean with 295 units.


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## Saintsfanfl (May 23, 2016)

JIMinNC said:


> From my perspective, the most significant advantage of the hotel-based systems versus independents is not rentals. I have no interest whatsoever in that. The advantage is the network. When you buy Marriott you are not buying just one resort, you're buying a network of over 60 properties in the U.S. and internationally, with consistent and outstanding quality and amenities across all of them. That is what makes the higher maintenance fees worth it to me. (And even the higher rate of  fee increases.)



You can make a reservation at any of those properties without buying and without having the annual maintenance fee commitment. There is nothing exclusive about the Marriott network.


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## SueDonJ (May 23, 2016)

Saintsfanfl said:


> You can make a reservation at any of those properties without buying and without having the annual maintenance fee commitment. There is nothing exclusive about the Marriott network.



That's true of any property though.  I think Jim's point is more a comparison between buying into a timeshare that's part of a large network with an advantage for exchanging internally, and buying into an independent property that's affiliated with an outside exchange company.  It's definitely a factor to consider if buying is on the table.


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## JIMinNC (May 23, 2016)

Saintsfanfl said:


> You can make a reservation at any of those properties without buying and without having the annual maintenance fee commitment. There is nothing exclusive about the Marriott network.



Of course, but at what price? Hilton Head summer for over $600/night for Grande Ocean or Barony? Spring or fall for $350 to $400/night at those same places? Newport Coast for $400-$800/night depending on season? A 1BR on Maui for $450-$600?

Our reservation in a 2BR OF at Barony for next April during Heritage week would probably cost over $4200, if we could even book it. Right now, there's no availability that week, but the week before, a 2BR OF, with taxes, is $602/night. We would never pay that much, but the reservation cost us only 4000 DC Points.

Our upcoming Labor Day weekend visit would cost us over $1500 versus the 2000 or so DC Points we "spent."

And those comparisons are for the relatively pricey DC Points. If our weeks-based II trade request for Grande Ocean for Sept/Oct 2017 comes through, we'll get a week that would cost $2500 - $3000 cash for our $1232 Barony maintenance fee.


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## RLS50 (May 23, 2016)

JIMinNC said:


> Of course, but at what price? Hilton Head summer for over $600/night for Grande Ocean or Barony? Spring or fall for $350 to $400/night at those same places? Newport Coast for $400-$800/night depending on season? A 1BR on Maui for $450-$600?
> 
> Our reservation in a 2BR OF at Barony for next April during Heritage week would probably cost over $4200, if we could even book it. Right now, there's no availability that week, but the week before, a 2BR OF, with taxes, is $602/night. We would never pay that much, but the reservation cost us only 4000 DC Points.
> 
> ...


FWIW, your comments above are the same conclusion we finally arrived at when deciding on whether we wanted to buy into the Marriott system or not.   

We could always rent from existing owner or book directly with Marriott, with no "risk" but at a potentially very high premium.  And even with paying the higher "no risk" premium, we had even less guarantee we could get a week we wanted during those planned trips where the exact week mattered. 

But related to our conclusion for sure was the MF factor discussed in this thread.   Are MF's going up too fast at the Marriott's?   And should that be a major concern?    Everybody comes at it from a different angle and IMO many good points have been made on both sides.


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## Saintsfanfl (May 23, 2016)

JIMinNC said:


> ...We would never pay that much, but the reservation cost us only 4000 DC Points....



Only 4,000 points? How much do 4,000 points cost up front and annually?


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## Saintsfanfl (May 23, 2016)

SueDonJ said:


> That's true of any property though.  I think Jim's point is more a comparison between buying into a timeshare that's part of a large network with an advantage for exchanging internally, and buying into an independent property that's affiliated with an outside exchange company.  It's definitely a factor to consider if buying is on the table.



But it is not an advantage if it can be had without buying into that network. I can own at an independent and still stay at any Marriott whether I rent from an owner (week or points), exchange, or book direct (fully cancel-able and no prepayment).

I did buy at Lakeshore Reserve just recently for day use. That is something that I could not get through any other means. DC points owners have no day use privileges. Unfortunately Lakeshore is still expensive resale but for me it will be worth it.


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## JIMinNC (May 23, 2016)

Saintsfanfl said:


> Only 4,000 points? How much do 4,000 points cost up front and annually?





Saintsfanfl said:


> But it is not an advantage if it can be had without buying into that network. I can own at an independent and still stay at any Marriott whether I rent from an owner (week or points), exchange, or book direct (fully cancel-able and no prepayment).



The maintenance fee or point rental cost is about $0.50/point so for 4000 points it is about $2000. So the "net" savings is $2200 on my example stay. Over time those savings recoup the up-front buy-in cost. We own an enrolled week and just slightly more than the minimum point package. Total buy-in was about $23K. The resale value of what we own may be $9K to $10K, so the costs we have to recoup over time are about $13-14K. Just the two examples I mentioned above account for over a 20% cost recovery.

The above is just the old rent vs. buy discussion that has been beat to death ad nauseam here on TUG. 

And yes, while you can get into a Marriott without owning in the network, for us, each of the options you noted come with significant negatives:

*Rent a week from an owner:* Not our cup of tea. Don't like that the owner controls the reservation instead of us.

*Rent points: * We do this, but we had to have a base-level point package first. Yes we could have a points owner make a reservation for us, but that comes with the same issue as above - they still control the reservation.

*Exchange:* Yes, independent owners trade into Marriotts all the time without owning a Marriott. But I detest the weeks-based exchanging process. We'll try an internal Marriott exchange during a shoulder season from time to time due to the Marriott preference, but having to live and die by II every time is not at all appealing. And with trading we can't guarantee the view category, with DC Points we can.

*Book Direct:* In most cases this is cost prohibitive.

So yes, owning a Marriott costs more than an independent. But that premium price offers advantages and benefits that can't be realized in exactly the same way with an independent. To many of us, it's well worth it for the certainty of quality and a more satisfying reservation booking process.


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## Chicalula (Sep 8, 2017)

MALC9990 said:


> Jim, you have identified an essential difference between US resorts and those in Europe and Thailand. I own at all 3 Spanish Resorts and also in Thailand. Legislation in Spain and Thailand means there are differences to the USA as far as the Resorts T&Cs are concerned. So there is a requirement that MF increases are constrained by the county inflation rate but not controlled.
> 
> Also these resorts do not have a HOA because there are no owners. What we own is a Right to Use and so we have is an Advisory Board of owners of the right to use. My experience in recent years has been that the advisory boards have been active in constraint MF increases but there have been circumstances which have caused above inflation rate Increases in MFs. For example at Son Antem, the resort was integrated with the Marriott Hotel which was part of the original development. The vacation club resort used the hotel front desk service for check in, it used the hotel telephone system, the hotel internet service, the two entities shared security costs. Housekeeping was a shared service as was garden and grounds maintenance, property maintenance etc. the hotel and vacation club was managed by a single Resort Manager with a combined resort management team.
> 
> ...



Hi Malc990, 
I appreciate very much your comments. I am owner of one TS in Son Antem since 2005. I have tried to get the HOPA from MVCI customercare without luck. Do you know where to get this "standard" document?


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## bazzap (Sep 8, 2017)

Chicalula said:


> Hi Malc990,
> I appreciate very much your comments. I am owner of one TS in Son Antem since 2005. I have tried to get the HOPA from MVCI customercare without luck. Do you know where to get this "standard" document?


Owners who purchased direct from Marriott should have all received a paper copy of the HOPA.
We first bought at Son Antem around the same time as you and received one ourselves.
I have not seen or been able to track down an electronic version unfortunately.
I too would welcome a pdf or similar version for all my home resorts.


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## Chicalula (Sep 8, 2017)

bazzap said:


> Owners who purchased direct from Marriott should have all received a paper copy of the HOPA.
> We first bought at Son Antem around the same time as you and received one ourselves.
> I have not seen or been able to track down an electronic version unfortunately.
> I too would welcome a pdf or similar version for all my home resorts.


Thanks, 
we didn't receive a HOPA when we signed and I'm aware my friends who bought in Marbella neither got one. We have the Term Sheet (3 specific pages) and later a Holiday Ownership Certificate. That's all. 
And neither documents includes information about: RTU years, Termination, Exit clause etc.


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## bazzap (Sep 8, 2017)

Chicalula said:


> Thanks,
> we didn't receive a HOPA when we signed and I'm aware my friends who bought in Marbella neither got one. We have the Term Sheet (3 specific pages) and later a Holiday Ownership Certificate. That's all.
> And neither documents includes information about: RTU years, Termination, Exit clause etc.


I can't explain that unfortunately.
Just checking back, we did buy earlier than you.
We received two versions of the HOPA for Club Son Antem, one dated June 2001 and the other dated January 2003.
Both of these are much more substantial brochure style documents.


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## Xpat (Sep 8, 2017)

bazzap said:


> I can't explain that unfortunately.
> Just checking back, we did buy earlier than you.
> We received two versions of the HOPA for Club Son Antem, one dated June 2001 and the other dated January 2003.
> Both of these are much more substantial brochure style documents.



While I don't own at Son Antem, I'm curious what the HOPA says about what happens at the end of the RTU? I own at Playa Andaluza and Marbella and can't seem to find any information about what happens at termination.


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## Chicalula (Sep 8, 2017)

bazzap said:


> I can't explain that unfortunately.
> Just checking back, we did buy earlier than you.
> We received two versions of the HOPA for Club Son Antem, one dated June 2001 and the other dated January 2003.
> Both of these are much more substantial brochure style documents.


Thanks, 
but do the 2003 version include Termination Clause?
Don't think so....


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## bazzap (Sep 8, 2017)

jpl88 said:


> While I don't own at Son Antem, I'm curious what the HOPA says about what happens at the end of the RTU? I own at Playa Andaluza and Marbella and can't seem to find any information about what happens at termination.


I will try to check what our Club Son Antem HOPA says when I can build up the energy to wade through all the terminology.
However, I contacted Owner Services back in 2015 seeking clarification about RTU resorts and what happens at their end date.
Their response was
"the property goes to the land owner and if the lease is renewed then the usage of the weeks for the owners will still continue."
I also checked the HOPA for our Playa Andaluza RTU ownership and if I read the "legalese" correctly then at the end of term either
- after discharging any liabilities and management charges, the net proceeds of sale are distributed to existing holiday owners in good standing
or
- the plan is renewed along with the RTU ownership for existing holiday owners in good standing


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## Xpat (Sep 8, 2017)

bazzap said:


> I will try to check what our Club Son Antem HOPA says when I can build up the energy to wade through all the terminology.
> However, I contacted Owner Services back in 2015 seeking clarification about RTU resorts and what happens at their end date.
> Their response was
> "the property goes to the land owner and if the lease is renewed then the usage of the weeks for the owners will still continue."
> ...



Thanks for checking. The sales staff (I know, not always the most reliable source) here at Playa said something along the lines of - at the end of the RTU the lawyers/accountants would determine how much would be owed to the owners. They also mentioned that the land Playa and Marbella are built on is not owned but leased. Personally I assumed that at end of RTU I would lose ownership and MVCI would try selling the weeks all over again, so anything better than that is a bonus


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## bazzap (Sep 8, 2017)

jpl88 said:


> Thanks for checking. The sales staff (I know, not always the most reliable source) here at Playa said something along the lines of - at the end of the RTU the lawyers/accountants would determine how much would be owed to the owners. They also mentioned that the land Playa and Marbella are built on is not owned but leased. Personally I assumed that at end of RTU I would lose ownership and MVCI would try selling the weeks all over again, so anything better than that is a bonus


I believe this may be the primary reason why resorts in Europe, Phuket, Aruba, Custom House Boston? are RTU, because the land is bot owned by MVC.


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## Xpat (Sep 8, 2017)

bazzap said:


> I believe this may be the primary reason why resorts in Europe, Phuket, Aruba, Custom House Boston? are RTU, because the land is bot owned by MVC.



Probably. I thought there was also a sales angle to it. I think property ownership by foreigners is somewhat restricted in Thailand. It also seems to me that real property transfers in Spain (or Europe generally) involve high taxes and is more complicated than in the US.


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