Remind me again why Red White & Blue weeks have the same MF

[boyblue]

There are very few places in the world that do not have a fluctuation in demand so why it the TS model built on the premise ignores this fact - or is it?

Can something be done to add value to blue & white weeks

 

[DeniseM]

Because in reality, the maintenance costs the same, regardless of the demand for the week.

Remember that people also paid less, sometimes much less, for the off-season weeks.

 

[CO skier]

Because in reality, the maintenance costs the same, regardless of the demand for the week.

Remember that people also paid less, sometimes much less, for the off-season weeks.

Not all resorts adhere to this model. In our resort, annual maintenance fees are based on season. Using a 3 br as an example:

Swing season $486
Summer season $720
Prime ski season $957
uber-Prime weeks 51 & 52 $1200

This may be more sustainable versus the "all maintenance costs the same," so all weeks pay the same maintenance. Why would people want to pay the same MF for Swing season as Ski season? In an all-weeks-pay-the-same-MF resort, the HOA gets stuck with the Swing season foreclosures; whereas, the HOA can sell the Ski season foreclosures.

With the season-adjusted MF, it is easier to find Swing season buyers at half the MF of Ski season.

It is true, though, that the actual maintenance costs per week are about the same throughout the year, so the season-adjusted-MF resort is difficult to find.

About the only way to add value to white and blue weeks is to lower the relative MF versus the red weeks.

 

[ronparise]

The timeshare model doesnt ignore the variability of demand completely. When the developer sold this stuff, the price he got for the red weeks was, no doubt, much more than for the the blue weeks

Even now on the resale market, you will pay more for the high demand weeks. ie July 4th in an ocean front unit in Ocean City Md, will cost you a lot more than a winter week in a unit that overlooks the dumpster.

Annual maintenance however is likely to be the same. and as you suggest its a problem. Blue week owners feel as if they are subsidizing the red week owners....and they are

The number of Blue week owners that just walk away when they finally get sick of this inequity is one of the biggest problems for timeshare HOA's and why maintenance fees are rising faster than the cost of living

 

[WinniWoman]

When we bought from Smugglers Notch back in 1999 (way before they offered RCI points and way before they converted to Wyndham), the only way you were ale to purchase 2 weeks as a club owner was to buy a prime week with a floater/off-season week "attached" to it. If you only wanted to purchase one week, you could only purchase a prime week to use every other year with an off-season/floater to use in the in-between years. This ensured that the resort got the "less in demand" weeks sold. Either way, the maintenance fees for all the weeks are the same.

 

[Talent312]

In systems which ignore seasons, off-weeks get hammered twice --
1. Although they may have cost less initially, over time, total MF payments may far outstrip price, narrowing the cost-to-own. Eventually, the difference may be insignificant.
B. As buyers cop to the fact that premium weeks will generate far more points for the same MF$, the resale value of off-week units fall thru the floor.

... but of course, the sales creeps won't tell the hapless buyer that.
They'll just say it's a cheaper way into the system, and many fall for that.
.
.

 

[Saintsfanfl]

I can possibly buy the idea that less demand weeks actually cost less at some resorts, but it can't be a huge difference. At places like South Florida there is no way it cost more to maintain just because the month is February. If you think about it, July/Aug cost more in South Florida because of all the A/Cs running. The staff do not earn less money during off peak times.

I think some of you are confusing supply and demand with actual cost. As an owner, you are stuck with actual cost.

 

[ace2000]

I've got a red week, you got a blue week... deal with it! That's your problem not mine.

Seriously though, do the blue week owners really think they're going to get any sympathy from the red week owners? Probably not. It's a known issue that has been raised many times in the past. For anything to change, it will take a huge flow of blue week owners to quit paying their MFs. Until that happens to any degree of magnitude, it will just be an "annoyance" to the HOAs.

 

[Saintsfanfl]

...it will take a huge flow of blue week owners to quit paying their MFs.

This brings up an interesting point. This does in fact happen almost everywhere. Defaults occur for off peak weeks far more than peak weeks. Who pays for these defaults and associated bad debt? The remaining owners which now results in a ratio change that weights the red week owners more because more of them remain versus blue week owners. This causes the red week owners to subsidize the blue weeks, and not the other way around.

If you were to put each season in it's own bubble on actual expense, the blue season would pay a much higher maintenance fee than the red season. There aren't nearly as many current paying blue season owners as the red season. With fewer weeks to allocate the costs to, maintenance fees would have to be higher.

If you changed the model to have blue weeks pay a lower maintenance fee (and therefore the red season subsidizing the difference), it may result in less defaults but how much less is debatable. It would also obviously cause the up front price of red to go down and blue to go up. I don't see much gained, if any, by changing the current model. It would definitely devalue peak weeks.

 

[ace2000]

This brings up an interesting point. This does in fact happen almost everywhere. Defaults occur for off peak weeks far more than peak weeks. Who pays for these defaults and associated bad debt? The remaining owners which now results in a ratio change that weights the red week owners more because more of them remain versus blue week owners. This causes the red week owners to subsidize the blue weeks, and not the other way around.

If you were to put each season in it's own bubble on actual expense, the blue season would pay a much higher maintenance fee than the red season. There aren't nearly as many current paying blue season owners as the red season. With fewer weeks to allocate the costs to, maintenance fees would have to be higher.

If you changed the model to have blue weeks pay a lower maintenance fee (and therefore the red season subsidizing the difference), it may result in less defaults but how much less is debatable. It would also obviously cause the up front price of red to go down and blue to go up. I don't see much gained, if any, by changing the current model. It would definitely devalue peak weeks.

All you have to do is ask a red week owner about your solution. If you make the blues pay less, guess who has to pay more?

I know you can argue that it would mean less defaults (and more revenue), but red week owners are not going to be happy about it regardless.

 

[ronparise]

I've got a red week, you got a blue week... deal with it! That's your problem not mine.

Seriously though, do the blue week owners really think they're going to get any sympathy from the red week owners? Probably not. It's a known issue that has been raised many times in the past. For anything to change, it will take a huge flow of blue week owners to quit paying their MFs. Until that happens to any degree of magnitude, it will just be an "annoyance" to the HOAs.

I am dealing with it...Im walking away. leaving you with increased fees.

A possible solution is in the Smuggs model posted above...When the fees for the red weeks owners gets close to double what they should be (based on no bad debt) award each red week owner a "free" blue week.

 

[ace2000]

A possible solution is in the Smuggs model posted above...When the fees for the red weeks owners gets close to double what they should be (based on no bad debt) award each red week owner a "free" blue week.

How does the HOA make up for the lost revenue then? Increasing the fees for the red weeks? That's the only way it can work.

 

[tschwa2]

I think it depends. I own a week in Ocean City, MD where the MF's is a very reasonable $395 for a 2 bedroom ocean side 30 unit resort. Certainly if you had winter weeks pay $350, mid season weeks pay $400 and prime season weeks pay $450 I don't think it would effect resale value of units in the least. I don't think it would entice more people to buy winter weeks but it would might further slow down the slow exodus of the remaining winter owners. At least a third and sometime a half of Nov-March weeks are HOA owned or non performing and this is despite not taking weeks back and fairly harsh legal action against non performers. In winter even with RCI value of 6 or less and rental prices below $200 the place is 2/3's empty. In summer despite a rental price of $800-$1000 the place is full.

In MD there is a law that all intervals have to pay the same MF's so it is not an option though.

In winter on check in days there only needs to be one person to check in the 4-10 units checking in. Most of these stay only the weekend so by Tuesday it is not unusual to see only 1-3 cars remaining. One housekeeping staff can service all the units at this time. There is no need for parking permits or policing the parking lot. There is no additional wear and tear from 4-8 (in a sleeps 6 unit) Most units have had the hot water switch off and heat set at 66 degrees. No constant sand dragged into the unit winding up down the bathtubs and washer/dryer, no dishwasher used 5-7 times during the week. Every bed and often the sofa bed is used every night in the summer the 4-10 checking in the winter are either small families with 1 or 2 children or older couples. In summer there are at least 3 check in folks and I am not sure how many house keeping staff but since 30 units are checking out at 10 am on Friday and 30 units are checking in at 5 pm (instead of the average of 2-3 out on Friday -with 2-4 out earlier in the week and 4-5 in on Friday during the winter. Heat and Air conditioning might cost about the same but it is about 30 units cranking up A/C in the summer vs 5 cranking heat in the winter.

My feeling is that $200 for winter Nov-Mar, $350 for April and October, $400 for May and September and possibly the first week in June, and $600 for summer would be reasonable and might lower the resale value of summer weeks but most summer owners don't sell.


I own a June week, a May week and a February week. I am in the process of getting rid of all three because I don't think they can survive with the imbalance. It was built in the 80's and rather that letting it end in 2016 they voted to extend indefinitely and with no amenities for winter owners I don't think it can survive for more than 10 years if the fee structure doesn't change.

 

[tschwa2]

I am dealing with it...Om walking away. leaving you with increased fees.

A possible solution is in the Smuggs model posted above...When the fees for the red weeks owners gets close to double what they should be (based on no bad debt) award each red week owner a "free" blue week.

But that would have to be written into the CC&R's from the beginning else why would a red owner take and pay for a blue week.

It worked for Smuggs but ultimately the developer gave up and gave the selling contract to Wyndham who are doing it with points instead of the double week. They also had the EOY - annual one week contracts. Red week (winter or summer- you decide when you purchase) one year and floating off season week the off year.

 

[csxjohn]

I've got a red week, you got a blue week... deal with it! That's your problem not mine.

....

Ah, but it is your problem. Denise constantly reminds us that if we walk away from our timeshares we burden the remaining owners.

I know you said it jokingly but if the blue week owners perceive this to be the attitude of the prime week owners, do you think the blue week owners will care about you and your increased fees when they try to decide if they should just walk away?

 

[Rent_Share]

BTTWWADI

Because that's the way we always did it​

 

[ace2000]

Ah, but it is your problem. Denise constantly reminds us that if we walk away from our timeshares we burden the remaining owners.

I know you said it jokingly but if the blue week owners perceive this to be the attitude of the prime week owners, do you think the blue week owners will care about you and your increased fees when they try to decide if they should just walk away?

Yes, but it appears to reflect the reality of the situation. Look back at the responses of this thread and previous threads about this topic.

 

[timeos2]

Like it or not regardless of when/how costs are incurred there is the pesky fact that the VALUE of the ownership/use/rental is often seasonal at most resorts. To say everyone must pay the same puts the less desirable times at a distinct disadvantage.

State laws may prohibit varied rates. Yet the better times (red) owners will likely end up paying more over time if the lesser ones logically allow their time to go delinquent. Despite these laws there are ways to adjust fees (points systems, RTU's vs a deeded ownership, long term leases, etc).

It is up to each resort to either find amenities / attractions for off season times to make it a destination and/or find ways to adjust fees downward (and therefore other fees upward) so the values are properly reflected to the owners.

It may not be easy but it can be done. Those resorts that refuse to see that and rely on continuing to subsidize top tier owners with lower tier fees will eventually lose those lower owners or have the whole system implode. If it is fair it isn't a sustainable model in the long term.

 

[Rent_Share]

Actually all remaining owners will pay more overtime as more owners default, based on their inability to derive any value (use or trade for use) and inability to sell.

There has to be a tipping point where the remaining owners might be able to get to a super majority to vote to liquidate, I feel sorry for any resort that requires unanimous consent to liquidate,

Is there a point where the HOA becomes insolvent and can use Bankruptcy Court to compel the remaining owners to sell and liquidate a timeshare project that is no longer viable ?

 

[tschwa2]

I think the problem with the super majority is the HOA ends up owning so many units and if the board is controlled by the red week owners who want to hold onto their summer units until the bitter end will not vote the weeks to liquidate. My resort could have walked with a regular majority in 2016 but 1/3 of the blue week owners have already walked away and the other 2/3 are fairly apathetic at best but the red week owners are still passionate.

 

[gnorth16]

This is the reason why some resorts have 20% bad debt! Then all the red week owners do have to deal with it. There is more to buying a good resort with a good week. If it is seasonal, it has a much greater chance of bad debt and owner default. Look at how the resort is run, the increasing MF's and especially the bad debt.

 

[MichaelColey]

I think it would be more fair to charge different MFs for different seasons, but it's fairly rare (outside of points systems).

When you look at points systems, if something takes 140k points in off season and 400k points in prime season, the "prime season" owners are paying higher MFs (per week) because they have/need more points.

I don't think it's something that could be easily changed, though. People already bought with the premise that MFs are the same for all seasons.

 

[presley]

It seems strange to us who buy resale. You have to look at it from a developer sales model. Each week costs about the same for normal cleanings, resort staff, etc. The developer will offer you the highest season for $30K and when you say "no" they will offer you the lowest season for $6K. They probably never mention the annual dues at all. You just buy the great bargain where you just saved $24K!

 

[Sandy VDH]

The points system where you pay MF by the point handles the variation between value you get for your points.

All fixed unit size with fixed MFs provides more incentive for the blue week to walk as they get less (in TPU or Points) for the same MF as that red week owner. The red week owner might be able to rent their unit at a profit, the blue week owners it often costs more that what it would yield in the rental world.

More resorts may likely have to get to a UDI points based MF in order to not lose the blue owners, and have all that default fall on the shoulders of red owners.

If I own a red week at a resort where 75-80% of blue and white owners have bailed, it is now even NOT cost effective to keep the red week. Whereas if I own a UDI type of ownership I pay for what I get. Fairer in my books.

 

[Rent_Share]

If I own a red week at a resort where 75-80% of blue and white owners have bailed, it is now even NOT cost effective to keep the red week.

So what is the HOA planning to do 20-25 % of the owners cannot sustain 100% of the operating budget, however they should receive a dividend should the real estate be liquidated and distributed amongst the remaining 20-25 % if the owners