Re: Hyatt Residence Club Key West, Sunset Harbor — HV Global Management Corporation ("HV Global")
Dear Sunset Harbor Resort Condominium Association Member:
Since joining the management team, I have enjoyed spending time meeting with boards and visiting the fabulous resorts in the Hyatt Residence Club portfolio, and I can immediately understand why you love Sunset Harbor so much.
I am writing today because we have just been made aware that the board of directors of Sunset Harbor Resort Condominium Association has scheduled a meeting of the association membership for July 14 to vote on whether to terminate the Management Contract and terminate the Club Resort Agreement currently in effect. Upon learning this news, we wanted to connect with you as a valued Owner and to thank you for your ownership. In our view, we are part of the fabric of Hyatt Residence Club Key West, Sunset Harbor, having provided quality services for over 20 years, and we believe it is critically important that you also hear from us as part of this process.
Serving Sunset Harbor since 1994
Since 1994, HV Global Management has had the pleasure of serving as the management company for Hyatt Residence Club Key West, Sunset Harbor, and we have a strong desire to continue serving as your management company. Our goal at opening was to create a product that would provide flexibility and the highest quality home resort for all Sunset Harbor Owners. In addition to creating a dedicated window in which every Owner would have the guaranteed right to reserve their fixed unit/week, we also created the option of exchanging into other Club Resorts, Interval International®, and World of Hyatt®. While some Owners may have no desire to exchange, we want to remind all Owners that these flexible use options are provided by Hyatt Vacation Ownership and would cease immediately upon termination of the Club Resort Agreement. As additional benefits are expected to be added to the program in the future, we hope that you will view those as additional travel opportunities for you and your family.
Hyatt Residence Club is and has always been dedicated to providing quality branded experiences for our Owners. The ability to do that is only possible through our team and the lasting relationships that they’ve created with Owners over the span of three decades. Sunset Harbor’s long-term tenured resort colleagues (some as long as 20 years) see you all just like family and are deeply committed to you and your ownership experience. I imagine each of you can think of a familiar face or two who has repeatedly helped you make unforgettable memories during your time in Key West.
You may have heard that Leidys Torres, General Manager, has recently moved from Key West after a six-year stint to be closer to family. Though we know many of you will miss Leidys, we are actively in the search and interview process to fill this integral role. Thankfully, we have two other sister Hyatt Residence Club properties in Key West, which allow us to support and assist you during this interim as needed, and a task-force manager from another Hyatt Residence Club resort filling the current need. We consider ourselves fortunate to be able to continue providing this level of support during a time of transition in such a challenging labor market.
As your management company, we have a solid and strong reputation in the vacation ownership industry and specifically within the Key West market. In addition, we recently dedicated a core group of leaders — myself included, along with Stephanie Butera (who wrote to you earlier in the year) — who are 100 percent dedicated to Hyatt Vacation Ownership. That team has been working hard over the last year to build the future for the brand, which includes maintaining exceptional service and management support, listening to Owners, and addressing Owners’ concerns and ideas. There are many positive changes being worked on that balance the needs of Owners who simply want to use their home resort while also enabling Owners who want to explore new vacation options.
Upcoming Vote — Hearing from Us
As your management company, we believe it is important that you receive comprehensive information regarding the issues you are being asked to vote on. To assist you in making a fully informed decision about your management company, we have outlined a few points for your consideration:
Association Funds and Rental Income
- Over the past five years the management company, working with the board of directors, has managed to keep the maintenance fee growth to an average increase of only 3.2%.
- HV Global takes its role as a good steward of your association’s funds very seriously and works in partnership with your board of directors. There are many ways HV Global and the Hyatt Vacation Ownership business successfully support Sunset Harbor including insurance programs as part of a broader master portfolio, buying power using a national procurement service provider, Avendra, as well as through parent company, MVW, and even specifically leveraging our buying power in Key West as we manage multiple resorts in the market.
- Each year, the management company works to negotiate favorable and competitive insurance coverage on behalf of the associations that it manages. As the volatile insurance market continues to deteriorate, our risk management team actively works to procure insurance programs specific to timeshare resorts, like Sunset Harbor. By participating in our portfolio insurance programs (versus stand-alone), the management company is able to procure insurance programs with a breadth of coverages for which the association benefits.
- Club Rental income benefits all Owners in your annual budget, and the details are outlined in the Club Resort Agreement. The rental income benefited the HOA budget and all Owners by over $88,000 in 2019, 2020, and 2021. In addition, rental income for the past five years exceeded $433,000.
Fees
- Resort fee income refers to fees collected from all renters at Sunset Harbor. HV Global has worked with the board of directors to increase this fee to offset increased costs, which helps reduce maintenance fee increases. The resort fee income benefited the HOA budget and all Owners by over $31,000 in 2021.
- Parking fee income has also been a focus for HV Global and the board of directors. There is no on-site parking for Sunset Harbor Owners and guests, so a parking agreement remains a cost of doing business for the association. The expense of parking is funded by maintenance fees as well as nightly fees for non-Owners. In 2021, HV Global successfully collected over $91,000 in parking fees and a significant share of that association income came from non-Owners, including renters and exchangers.
Collection Process
- HV Global has worked hand in hand with your board over the past few years to improve collection processes and outcomes. HV Global has continued to improve the collection process, provided collection forecasts to your board, and has shown positive results in improved collections. All these efforts support the board’s resale program and improved financial results for all Owners. It should be made clear that while most Sunset Harbor Owners pay their annual maintenance fees on time, some Owners do not. With these efforts, HV Global has driven reductions in year-end delinquencies over the past three years:
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Operational Costs
- The board communication provides an example regarding the landscaping contract for the resort and associated costs. We would like to provide you with more detail regarding this example. HV Global partnered with your board in this effort. Ultimately, HV Global reduced the schedule and scope for the landscaper, while remaining focused on maintaining the property to the standards Owners have come to expect. HV Global utilized its in-house landscape manager, at no additional cost to Sunset Harbor, to align the best scope of work in the request for proposal and to ensure the bids met the needs of the association and were in line with the market. Additionally, HV Global was able to use its buying power of its Hyatt Residence Club Avendra agreement to negotiate a lower cost for Sunset Harbor. HV Global worked with the board toward a better outcome for the Owners and to date has seen improved financial benefits while achieving the needed resort experience. It is also worth noting that the vendor recently requested an increase in its rate mid-contract, but with HV Global’s leverage with a national procurement company, HV Global was able to stave off any immediate increase.
- In terms of housekeeping costs, HV Global continues to bid all work competitively with contracted services on a regular basis, in an effort to find the best value for the association and its members. The Key West labor market has seen extreme level of cost increases (most notably in the housekeeping area), which are affecting all local businesses. This challenging labor market has resulted in off-cycle wage increases for housekeeping, front desk, and engineering staff in order to retain crucial staffing levels. Additionally, the local housekeeping provider notified last summer that a 30% increase would be needed to maintain current staffing levels at the resort. HV Global immediately sought competitive bids from other providers while negotiating with the current vendor. Working with the board during detailed budget reviews, HV Global eventually determined that the best value for the association was to retain the current vendor. However, HV Global was successful in negotiating improved staffing efficiencies and processes and reduced the projected cost increase by 12%.
HV Global provides updated expense information on a monthly basis to your board of directors, as well as an analysis of the increases in materials and labor costs in the Key West market.
We Value You and Are Here to Listen
The Hyatt Vacation Ownership team is actively working to address important issues that have been raised by Owners, such as transaction fees and reservation windows. We are working to ensure that existing Owners wanting to stay at their home resort continue to retain all the rights they have today, while adding incremental options for Owners who would like to use their ownership to access new vacation possibilities.
We hope that you find this information useful and, if you have any questions, we are available to answer them. We are planning a webinar to help address any outstanding questions on June 22, 2022, from 5:30 PM to 6:30 PM Eastern Time. |
