After 30 years of timesharing, I recently decided to look at the financials at the two resorts where we still own. There's some interesting things, maybe just to me.
Resort 1 is true legacy resort. It is a SW Florida beachfront resort that was established in 1982 by converting a motel built in 1959, a common practice in SW FL in the 70s and early 80s. It has an aging owner base and offers more-than-the-usual services to it's owners, an Owner Rental Program, a resale program, both rentals and resales to current owners at deep discounts, and year-round amenities day-use (beach club). There are resort-owned weeks that are both rented and offered for sale, being marketed on the Internet, through a local real estate company, and by various other means, like auctions and special offers to current owners (buy one for $650, get a second for $295).
I am getting information for this resort from the detailed budget(s) and financial statements prepared by a CPA firm.
Resort 2 is not a true legacy resort. It is in a popular Mid-South family tourist destination hosting 9 million tourists each year. It is located within an upscale gated golf community, and was established by the developer as an integral part of the residential/resort development, and was part of the developer's timeshare mini-system. The developer is long-gone, subsequent active marketing also ended long ago, and the timeshare mini-system is long gone. There are a lot of unsold units, especially in a "newer" timeshare-only section. Owners of any of the original 14 units have year-round day-use rights (country club) and are eligible for annual membership in the championship golf course. Owners pay a POA fee as part of their timeshare annual fee. This resort does not offer owners any of the extra services that Resort 1 does, Owner Rental Program, resale assistance, or discounts on rentals and resales. There are resort-owned weeks that are being marketed somehow, by some company that the Association does not like to discuss, but that is only for resort-owned weeks.
I am getting information for this resort from the breakdown for the annual fee.
Both resorts are dealing with the issue of defaulting owners, as do all resorts to one degree or another.
The first thing about Resort 2 is that not only is 18% of the annual timeshare fee going to the community's POA for the owned week, but another 10% is going to the POA for Association-owned weeks. So, 28% is a significant sum for owners of Resort 2 that owners of Resort 1 do not have, and the 10% that owners pay to the POA for resort-owned weeks is an expense to owners that I had never considered. So, unlike Resort 1, resort-owned weeks at Resort 2 not only represent no income, they actually cost all the owners extra money.
Of course, what I am really interested in is how the two resorts deal with the issue of defaulting owners, and if trying to do something pro-actively helps the owner base.
At Resort 2, Bad Debt expense is 8% and Legal Expense is 2% of the annual fee. However, there is a mysterious, unexplained Miscellaneous Income of 8.8%, so for the only-slightly-informed owner, it could be that they are doing something that creates a wash regarding defaults.
At Resort 1, Bad Debt expense is 10% and legal expense is 2% of the budget. I don't know how they go about taking weeks back other than that the most common way is through non-judicial foreclosure. However, income from other than owner assessments, i.e., rental income, rental commissions, and net unit sales income, is 11% of the budget. So, I can conclude that at Resort 1, the specific extra actions of the resort over and above normal resort operations offsets the expense of defaults.
Resort 1 is true legacy resort. It is a SW Florida beachfront resort that was established in 1982 by converting a motel built in 1959, a common practice in SW FL in the 70s and early 80s. It has an aging owner base and offers more-than-the-usual services to it's owners, an Owner Rental Program, a resale program, both rentals and resales to current owners at deep discounts, and year-round amenities day-use (beach club). There are resort-owned weeks that are both rented and offered for sale, being marketed on the Internet, through a local real estate company, and by various other means, like auctions and special offers to current owners (buy one for $650, get a second for $295).
I am getting information for this resort from the detailed budget(s) and financial statements prepared by a CPA firm.
Resort 2 is not a true legacy resort. It is in a popular Mid-South family tourist destination hosting 9 million tourists each year. It is located within an upscale gated golf community, and was established by the developer as an integral part of the residential/resort development, and was part of the developer's timeshare mini-system. The developer is long-gone, subsequent active marketing also ended long ago, and the timeshare mini-system is long gone. There are a lot of unsold units, especially in a "newer" timeshare-only section. Owners of any of the original 14 units have year-round day-use rights (country club) and are eligible for annual membership in the championship golf course. Owners pay a POA fee as part of their timeshare annual fee. This resort does not offer owners any of the extra services that Resort 1 does, Owner Rental Program, resale assistance, or discounts on rentals and resales. There are resort-owned weeks that are being marketed somehow, by some company that the Association does not like to discuss, but that is only for resort-owned weeks.
I am getting information for this resort from the breakdown for the annual fee.
Both resorts are dealing with the issue of defaulting owners, as do all resorts to one degree or another.
The first thing about Resort 2 is that not only is 18% of the annual timeshare fee going to the community's POA for the owned week, but another 10% is going to the POA for Association-owned weeks. So, 28% is a significant sum for owners of Resort 2 that owners of Resort 1 do not have, and the 10% that owners pay to the POA for resort-owned weeks is an expense to owners that I had never considered. So, unlike Resort 1, resort-owned weeks at Resort 2 not only represent no income, they actually cost all the owners extra money.
Of course, what I am really interested in is how the two resorts deal with the issue of defaulting owners, and if trying to do something pro-actively helps the owner base.
At Resort 2, Bad Debt expense is 8% and Legal Expense is 2% of the annual fee. However, there is a mysterious, unexplained Miscellaneous Income of 8.8%, so for the only-slightly-informed owner, it could be that they are doing something that creates a wash regarding defaults.
At Resort 1, Bad Debt expense is 10% and legal expense is 2% of the budget. I don't know how they go about taking weeks back other than that the most common way is through non-judicial foreclosure. However, income from other than owner assessments, i.e., rental income, rental commissions, and net unit sales income, is 11% of the budget. So, I can conclude that at Resort 1, the specific extra actions of the resort over and above normal resort operations offsets the expense of defaults.
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