How are the maintenance fees going to be impacted?

[DannyTS]

With the announced furloughs, resorts closures, I am wondering how the maintenance fees are going to be impacted. Any thoughts?

 

[andysnovel]

Maint payments are going to take a big hit, folks out of work etc. Reduced rental income etc.

 

[Luanne]

My thought is that maintenance fees will continue to be collected.

 

[bankr63]

Overall, I would expect them to go down a bit. With staff layoffs, the overall costs of maintaining the resort should be reduced for the year. Loss of rental income shouldn't make any difference, Vistana has to compensate for the MF for the units they hold just like any other owner; they should not penalize us for their not being able to rent their holdings. I don't expect Vistana to compensate me for the last minute cancellation of the rental we had lined up for our VOI last week.

 

[ski_sierra]

I'm curious what is going to happen but I am not sure Vistana has any incentive to reduce the MF. I doubt they will make efforts to reduce MF as that reduces their management fee. They need it more than ever at a time when their revenues from timeshares sales are going to take a hit. Not much we can do about it. I hope Vistana proves me wrong by finding out ways to reduce MF.

 

[bankr63]

Our MF's aren't set by Vistana, they are set by the HOA (which I admit is largely controlled by Vistana). However, the MF's are set based on actual expenses to operate, so if we DON'T see a significant reduction on the wages and salaries line we should be VERY suspicious. Now they might swallow some of that back in extra cleaning, which hopefully they are doing. I would like to think that some of that staff is reassigned to different roles that come up during a crisis like this.

 

[ski_sierra]

Our MF's aren't set by Vistana, they are set by the HOA (which I admit is largely controlled by Vistana).

yeah.. I don't even waste my time in writing that MFs are set by HOA since the boards are controlled by Vistana. I use the short form method of saying fees are set by Vistana.

 

[billymach4]

3 things in life are guaranteed. Death, Taxes, Maint Fees will go up!

 

[DannyTS]

I'm curious what is going to happen but I am not sure Vistana has any incentive to reduce the MF. I doubt they will make efforts to reduce MF as that reduces their management fee. They need it more than ever at a time when their revenues from timeshares sales are going to take a hit. Not much we can do about it. I hope Vistana proves me wrong by finding out ways to reduce MF.

Many costs are fixed, others will probably go down naturally like labor, utilities, cleaning, owner services. I am curious if some resorts, if permitted in the area, will take advantage of this period to update units and do other maintenance work that would otherwise be a nuisance to the guests.

 

[VacationForever]

a lot of resorts reported reduced working hours for the staff even before being closed. Many costs are fixed, others will probably go down naturally like utilities, cleaning, owner services. I am curious if some resorts, if permitted in the area, will take advantage of this period to update units and do other maintenance work that would otherwise be a nuisance to the guests.

This sort of maintenance work is considered non-essential during Shelter-in-place.

 

[bogey21]

My guess is that a lot of MFs won't be paid. Either a lack of funds or lack of desire to travel...

George

 

[DannyTS]

This sort of maintenance work is considered non-essential during Shelter-in-place.

right but the country may open the restrictions gradually depending on the area

 

[VacationForever]

right but the country may open the restrictions gradually depending on the area

When that happens, vacationers will be back...

 

[DannyTS]

My guess is that a lot of MFs won't be paid. Either a lack of funds or lack of desire to travel...

George

I wish we had an " I agree" emoji on Tug. I agree with comments like yours but I do not like the fact that it may happen so the "like" sign may not be the most appropriate

 

[VacationForever]

I wish we had an "agreed" emoji on Tug. I agree with comments like yours I do not "like" the fact that it may happen

What about using a sad face?

 

[DannyTS]

When that happens, vacationers will be back...

Yes and no. Some areas may open faster than planes going back to the regular schedules. I guess a lot of maintenance can be done with resorts at 30-50% occupancy. I am not saying they should do things just to keep people busy but some maintenance and projects might have been postponed waiting for the "right" moment

 

[byeloe]

as well the Peso is taking a beating, so not sure how that would impact MF

 

[DannyTS]

What about using a sad face?

not the same

 

[ocdb8r]

Have we seen any evidence that MVC/Vistana/HGVC Timeshare resorts are laying people off? I say this because unlike hotel operations, MVC is a) incentivized to keep staff on as most of their management contracts calculate their fee based on the resort's overall budget and b) timeshare resorts will not suffer the same lack of cash to pay resort employees as maintenance fees are being collected regardless (now, I admit, there will be some impact on revenue from ancillary services). I personally haven't seen anything reported either way so I'm genuinely curious if anyone has seen anything specific to timeshare resort layoffs (and I'm not talking developer and/or sales staff).

I think there's a decent probability maintenance fees increase as expenses are kept fairly flat (or with very minimal reduction) and "bad debt" (those not paying/defaulting on MFs) increases.

 

[DannyTS]

Have we seen any evidence that MVC/Vistana/HGVC Timeshare resorts are laying people off? I say this because unlike hotel operations, MVC is a) incentivized to keep staff on as most of their management contracts calculate their fee based on the resort's overall budget and b) timeshare resorts will not suffer the same lack of cash to pay resort employees as maintenance fees are being collected regardless (now, I admit, there will be some impact on revenue from ancillary services). I personally haven't seen anything reported either way so I'm genuinely curious if anyone has seen anything specific to timeshare resort layoffs (and I'm not talking developer and/or sales staff).

I think there's a decent probability maintenance fees increase as expenses are kept fairly flat (or with very minimal reduction) and "bad debt" (those not paying/defaulting on MFs) increases.

we shall see about the bad debt, most resort MF were paid in January so they should not be very different this year. 2021 is another story but I am not sure if that is reflected next year in the budget, maybe only in 2022. What is interesting in this business, when everything (eventually) normalizes, MVC would have acquired a lot of free inventory and be in a position to make a lot of money by selling it.

Many resorts are either closed or run at 20% capacity. The ones that are still open operate with a reduced staff (comments on FB) but I do not know the level for each. I agree with you though that MVC has an incentive to keep the expenses high but I just do not see how they can justify the same budget when the resort is almost empty or closed.

 

[ocdb8r]

we shall see about the bad debt, most resort MF were paid in January so they should not be very different this year. 2021 is another story but I am not sure if that is reflected next year in the budget, maybe only in 2022. What is interesting in this business, when everything (eventually) normalizes, MVC would have acquired a lot of free inventory and be in a position to make a lot of money by selling it.

Many resorts are either closed or run at 20% capacity. The ones that are still open operate with a reduced staff (comments on FB) but I do not know the level for each. I agree with you though that MVC has an incentive to keep the expenses high but I just do not see how they can justify the same budget when the resort is almost empty or closed.

Agreed, I wouldn't expect any effects of bad debt until next year...and it will slowly materialize. It will be curious to see how much (if any) inventory MVC picks up. I would suspect they are in cash conservation mode and will be waiving most ROFRs. They will pick up any defaults on loans, but that has as much a cost to them as a benefit to inventory. Defaults on MFs don't automatically go back to MVC - the HOA Board often has some discretion on how to deal with these (resell themselves, resell via MVC or sell back to MVC)....and whatever they may want to do, MVC also has to agree (meaning if they're still short on cash, they may not offer to pick up much).

On the resorts, just because they're closed or running at near nil capacity, doesn't mean MVC has to lay off or stop paying the employees...Disney is paying all hourly employees until at least mid-April while the parks are closed. My point is, with little incentive to reduce costs and no cash shortage (as the resort HOAs are paying the staffing bills from MFs), nothing stopping MVC from keeping payroll as normal. If this continues for a long sustained period, they may get pressure from HOA Boards to reduce costs, but if we're only talking about two-three months, I suspect they can explain their way out of not making any big changes.

 

[DannyTS]

Agreed, I wouldn't expect any effects of bad debt until next year...and it will slowly materialize. It will be curious to see how much (if any) inventory MVC picks up. I would suspect they are in cash conservation mode and will be waiving most ROFRs. They will pick up any defaults on loans, but that has as much a cost to them as a benefit to inventory. Defaults on MFs don't automatically go back to MVC - the HOA Board often has some discretion on how to deal with these (resell themselves, resell via MVC or sell back to MVC)....and whatever they may want to do, MVC also has to agree (meaning if they're still short on cash, they may not offer to pick up much).

On the resorts, just because they're closed or running at near nil capacity, doesn't mean MVC has to lay off or stop paying the employees...Disney is paying all hourly employees until at least mid-April while the parks are closed. My point is, with little incentive to reduce costs and no cash shortage (as the resort HOAs are paying the staffing bills from MFs), nothing stopping MVC from keeping payroll as normal. If this continues for a long sustained period, they may get pressure from HOA Boards to reduce costs, but if we're only talking about two-three months, I suspect they can explain their way out of not making any big changes.

For the US resorts, would they not apply for the government money like everyone else? I do not pretend I know the details of the bill that just past but that may be a contributing factor as well in their budget for the next 4 months. Seeing how the market reacted to their stock (60% up from the low, although a long way to where it was 2 months ago), I have a feeling that there is something for them in that bill.

 

[goaliedave]

Increase due to lost profits and more defaults.

Sent from my SM-A505G using Tapatalk

 

[okwiater]

With the new bills that passed, Vistana should be able to keep everyone employed, and take large portions of those wages as employment tax credits.

the trick is ensuring those tax credits flow through to the HOA to reduce maintenance fees.

 

[Sea Six]

I would like to see the fees go down a bit based on reduced costs. Also let the landscaping get a little rough instead of daily manicuring.