Maintance fees....points vs week?

[JIMinNC]

Your supposition is that 100% of the sales and marketing operation is laser focused on new sales of timeshares and that these timeshare sales account for 100% of the revenue from the sales and marketing operations. That is patently false and a gross mischaracterization.

If you look closely at the 10-K and understand what Development Margin is, you can answer that question.

Development Margin is totally related to the development and sales of timeshare interests. That's why they break that out separately in the discussion. So the $513 million is that portion of Sales and Marketing that is directly related to the $990 million in revenue earned from the Development and Sales of timeshare interests. Again, look at the bottom of page 59. If you look at the consolidated financials for all of MVW, you will see that total Marketing/Sales expenses for the entire company were $527 million. The other $14 million is associated with their Exchange and Third Party Management business line (page 66).

If some of the $513 million in Marketing and Sales that are included in Development Margin are not closely related to development and sales, they would be intentionally misleading investors and the SEC since Development Margin is one of the key metrics stock analysts look at in evaluating the health of their revenue stream/margins. If you have information to prove that, you should let the authorities know.

 

[Big Matt]

Not to beat a dead horse, but I've seen mention of Marriott's $20k cost to refurbish a unit used a few times as a reason/excuse for high MF around here. Um, again, this is inconsistent with the facts and how Marriott manages hard/soft/building maintenance.

Generally, Marriott follows a 5/7/10 or 5/7/12 model:

Soft goods (mattress, pillows, etc) replaced every 5 years
Hard goods (furniture and such) replaced every 7 years
Interior refurbs and such (remodels) every 10 or 12 years

Let's give this a hypothetical cost of:

$5k for soft goods per 5 years
$10k for hard goods per 7 years
$20k for refurb per 10 years

So in a 10 year period, Marriott spends:

$5k + $5 + $10K + 1/2 $10K + $20K

Or a total of $45K on maintenance of a particular unit in 10 years.

Meanwhile, using a fairly typical $1500 MF per unit week (52 unit weeks per unit x $1500). Marriott collects MF of $78K per year or $780K over 10 years.

Don't forget to include all of the property taxes, building exteriors, grounds, pools, bars/grills, game courts, fitness centers, grills, fire pits, and so on. Simple inflation accounts for much of the increase in fees. The rest is the cost of additions and upgrades in terms of materials, amenities, and staff salaries. The owners board votes on the management fee as well as all the rest of the budget. Don't blame Marriott for the fee increases.

 

[jimf41]

At post #7 you guys started to lose me. At #14 I think I started to get a bit dizzy and began drooling on the keyboard. At #26 my wife woke me from a semi-hypnotic state mumbling about the real meaning of timeshare life. I had a glass of wine on the porch, I'm better now.

 

[JIMinNC]

Not to beat a dead horse, but I've seen mention of Marriott's $20k cost to refurbish a unit used a few times as a reason/excuse for high MF around here. Um, again, this is inconsistent with the facts and how Marriott manages hard/soft/building maintenance.

Generally, Marriott follows a 5/7/10 or 5/7/12 model:

Soft goods (mattress, pillows, etc) replaced every 5 years
Hard goods (furniture and such) replaced every 7 years
Interior refurbs and such (remodels) every 10 or 12 years

Let's give this a hypothetical cost of:

$5k for soft goods per 5 years
$10k for hard goods per 7 years
$20k for refurb per 10 years

So in a 10 year period, Marriott spends:

$5k + $5 + $10K + 1/2 $10K + $20K

Or a total of $45K on maintenance of a particular unit in 10 years.

Meanwhile, using a fairly typical $1500 MF per unit week (52 unit weeks per unit x $1500). Marriott collects MF of $78K per year or $780K over 10 years.

Your numbers are only part of the maintenance fee story. The numbers for refurb seem like reasonable assumptions, but the refurb costs are only a small portion of your example $1500/year maintenance fee. Refurbs come from the Reserve Fee portion of the total fee. The Operating Fee that covers all the other expenses of running the resort, dwarfs the Reserve Fee. At Barony Beach Club in Hilton Head, the reserve fee for 2019 is $378.58 per interval, but the operating fee is $1040.68 per interval (total mf of $1399.76). The operating fee includes all the other things like housekeeping ($217/interval), property taxes ($89), maintenance ($99), the management fee ($127), Pool maintenance ($25), Insurance ($48), Front Desk ($56), Electricity ($46), Admin ($59), etc, etc.

For 52 weeks a year, the reserve fee amounts to $19,686 annually per unit ($378.58 X 52). But that has to cover not only the refurb on the units, but also each unit's share of refurb of common area expenses as well. Barony painted all the buildings last year, so I assume that came from reserves, and all HOAs are required to manage reserves according to laws in each state. Roof replacement, HVAC replacement, and other common area big ticket capital items are also covered by the reserves and are regulated by law.

 

[JIMinNC]

At post #7 you guys started to lose me. At #14 I think I started to get a bit dizzy and began drooling on the keyboard. At #26 my wife woke me from a semi-hypnotic state mumbling about the real meaning of timeshare life. I had a glass of wine on the porch, I'm better now.

Some of us are numbers people...some aren't

 

[dioxide45]

Generally, Marriott follows a 5/7/10 or 5/7/12 model:

Soft goods (mattress, pillows, etc) replaced every 5 years
Hard goods (furniture and such) replaced every 7 years
Interior refurbs and such (remodels) every 10 or 12 years

I was not aware that Marriott had such a refurb cycle. It was my understanding that it was either 5/10 or 6/12. I am not aware of the middle number refurb that you are referencing. To some degree, it will depend on the individual property and HOA.

Soft Goods is just that, replace pillows, mattresses, perhaps even sofas or reupholster furniture replace carpet and paint.
Hard goods would be the same, but perhaps also rip out appliances, toilets, sinks and cabinets. Though they will often let cabinets go longer than 10 years.

 

[Saintsfanfl]

I agree with Dioxide. Not sure where that extra refurb is coming from. An interior full remodel would be extremely rare. Definitely not every 10-12 years at any property. Not at timeshares anyway.

 

[Dean]

I was not aware that Marriott had such a refurb cycle. It was my understanding that it was either 5/10 or 6/12. I am not aware of the middle number refurb that you are referencing. To some degree, it will depend on the individual property and HOA.

Soft Goods is just that, replace pillows, mattresses, perhaps even sofas or reupholster furniture replace carpet and paint.
Hard goods would be the same, but perhaps also rip out appliances, toilets, sinks and cabinets. Though they will often let cabinets go longer than 10 years.

I agree with Dioxide. Not sure where that extra refurb is coming from. An interior full remodel would be extremely rare. Definitely not every 10-12 years at any property. Not at timeshares anyway.

That is my understanding as well. I've seen other timeshares where it was 6/12 or 7/14 and one that does a complete redo every 4 years (or at least did) but that one charges refurbishments extra when they do them rather than building them into the budget. It's not feasible to separate out soft goods from Furniture as often they are the same. What I have seen at times is they'll pick and chose when an item is holding up well, like the kitchen table set. I really like that Marriott often does model rooms and puts he choices to the test, this has seemed to work really well from what I've seen.

 

[bazzap]

I am sure that the refurbishment programme does vary significantly by resort.
Whilst it needs to retain MVC brand standards, the sensible approach is to make pragmatic decisions.
So for example in Phuket Beach Club, where the furniture is Thai hard wood with a long usable life, a decision to sand down and restain and/or fit a glass top to tables...etc means replacement timescales can be longer with cost and therefore MF savings whilst maintaining quality levels.

 

[4Sunsets]

You're confusing UNIT maintenance with overall maintenance. UNIT maintenance has hard/soft. The buildings themselves have maintenance schedules as well, which refurbs fall under.

 

[dioxide45]

You're confusing UNIT maintenance with overall maintenance. UNIT maintenance has hard/soft. The buildings themselves have maintenance schedules as well, which refurbs fall under.

Well, building refurbs don't happen every 7 years. THey often redo the paint and carpeting in the hallways when they redo the units. Building painting happens just about year round at Grande Vista. Roofs and siding usually last much longer than 7 or 12 years.

 

[Dean]

You're confusing UNIT maintenance with overall maintenance. UNIT maintenance has hard/soft. The buildings themselves have maintenance schedules as well, which refurbs fall under.

Your timelines do not match my experience of over 20 years owning Marriott with several units/resorts per year not apparently anyone else on this board who's seen the thread though those that have posted have the same experiences I have.

 

[TheTimeTraveler]

Not to beat a dead horse, but I've seen mention of Marriott's $20k cost to refurbish a unit used a few times as a reason/excuse for high MF around here. Um, again, this is inconsistent with the facts and how Marriott manages hard/soft/building maintenance.

Generally, Marriott follows a 5/7/10 or 5/7/12 model:

Soft goods (mattress, pillows, etc) replaced every 5 years
Hard goods (furniture and such) replaced every 7 years
Interior refurbs and such (remodels) every 10 or 12 years

Let's give this a hypothetical cost of:

$5k for soft goods per 5 years
$10k for hard goods per 7 years
$20k for refurb per 10 years

So in a 10 year period, Marriott spends:

$5k + $5 + $10K + 1/2 $10K + $20K

Or a total of $45K on maintenance of a particular unit in 10 years.

Meanwhile, using a fairly typical $1500 MF per unit week (52 unit weeks per unit x $1500). Marriott collects MF of $78K per year or $780K over 10 years.

Keep in mind that all Timeshare Villas experience extreme usage in that these units are turned over continually (used to be 52 times per year but now could be as much as every day). That to me equals a lot of wear and tear....





.

 

[4Sunsets]

Your timelines do not match my experience of over 20 years owning Marriott with several units/resorts per year not apparently anyone else on this board who's seen the thread though those that have posted have the same experiences I have.

Not everyone pays as close attention as we do, I'm sure. Most people only notice the hard/soft

 

[Dean]

Not everyone pays as close attention as we do, I'm sure. Most people only notice the hard/soft

I think you missed the point. We're talking lots of us that do pay attention, communicate with management and are involved with the resorts over a long period of time and no one has ever seen or heard an indication of a third schedule. I know for certain it doesn't exist at 3 resorts. Therefore if it happens at all, which I'm doubting, it isn't very common with the MVC resort.

 

[4Sunsets]

If you say so, but having been around for a long time. You are entirely misled if you don't think there is maintenance timing for the buildings themselves. Marriott has maintenance timings for everything, it's just what is shared and what isn't. You can put your head back down in the sand now.

 

[JIMinNC]

If you say so, but having been around for a long time. You are entirely misled if you don't think there is maintenance timing for the buildings themselves. Marriott has maintenance timings for everything, it's just what is shared and what isn't. You can put your head back down in the sand now.

I don't think anyone is disputing that they have timing/schedules for the buildings themselves. They obviously do. But I think dioxide45 nailed it in post #36, that there probably isn't just one schedule for "buildings". The roof is likely on a different schedule than the exterior paint since, especially at a coastal location with salt air, paint might need to be refreshed more frequently than the roof replaced. HVAC is probably on yet another schedule, etc, etc. So, the reality is, there are probably many schedules, not just two or three.

Clearly, as you noted in your post #39, the hard/soft schedules are the easiest to notice since that's what owners/exchangers interact with most directly, and those seem to be typically done on fairly obvious, regular schedules given the wear and tear and use they get. And for interior design/style reasons, they would typically want to do them in a more cohesive way to ensure everything works together from a style/design/color perspective. When they change the decor from earth tones to blues/greens, it's hard not to notice since almost everything changes.

 

[bazzap]

I don't think anyone is disputing that they have timing/schedules for the buildings themselves. They obviously do. But I think dioxide45 nailed it in post #36, that there probably isn't just one schedule for "buildings". The roof is likely on a different schedule than the exterior paint since, especially at a coastal location with salt air, paint might need to be refreshed more frequently than the roof replaced. HVAC is probably on yet another schedule, etc, etc. So, the reality is, there are probably many schedules, not just two or three.

Clearly, as you noted in your post #39, the hard/soft schedules are the easiest to notice since that's what owners/exchangers interact with most directly, and those seem to be typically done on fairly obvious, regular schedules given the wear and tear and use they get. And for interior design/style reasons, they would typically want to do them in a more cohesive way to ensure everything works together from a style/design/color perspective. When they change the decor from earth tones to blues/greens, it's hard not to notice since almost everything changes.

2001,

I don't think anyone is disputing that they have timing/schedules for the buildings themselves. They obviously do. But I think dioxide45 nailed it in post #36, that there probably isn't just one schedule for "buildings". The roof is likely on a different schedule than the exterior paint since, especially at a coastal location with salt air, paint might need to be refreshed more frequently than the roof replaced. HVAC is probably on yet another schedule, etc, etc. So, the reality is, there are probably many schedules, not just two or three.

Clearly, as you noted in your post #39, the hard/soft schedules are the easiest to notice since that's what owners/exchangers interact with most directly, and those seem to be typically done on fairly obvious, regular schedules given the wear and tear and use they get. And for interior design/style reasons, they would typically want to do them in a more cohesive way to ensure everything works together from a style/design/color perspective. When they change the decor from earth tones to blues/greens, it's hard not to notice since almost everything changes.

Yes I agree.
So for example at Phuket Beach Club, which has been open since 2001, some external painting is done every year, roof resurfacing has only fairly recently been completed and HVAC replacement is only just scheduled to start this hear and continue over several years.
This is planned totally differently to the regular hard/soft goods refurbishment programme.

 

[Gypsy65]

Sure maintenance fees are going up, but so are hotel rooms, particularly in resort areas where most timeshares are located. I remember in the early-mid 90s when we booked an oceanfront hotel room at the Hyatt in Maui including taxes for around $200/night. Now, it's closer to $600 all-in. Over the 25 years, that's a growth rate of about 4.5% to 5% per year. I bet that's pretty close to the growth rate for maintenance fees over the same period. Obviously, this is just one data point, but I bet many other areas are similar.

Agree
Plus many resorts have added to their portfolio along with having well kept grounds and added amenities

 

[Dean]

If you say so, but having been around for a long time. You are entirely misled if you don't think there is maintenance timing for the buildings themselves. Marriott has maintenance timings for everything, it's just what is shared and what isn't. You can put your head back down in the sand now.

Maybe but as noted, the room, outside Painting, parking lots, roof, etc will all be different. The one that's important to the members is generally what happens inside the units and that's a 2 tier schedule, not 3.

 

[dioxide45]

Maybe but as noted, the room, outside Painting, parking lots, roof, etc will all be different. The one that's important to the members is generally what happens inside the units and that's a 2 tier schedule, not 3.

It was also implied by the original post in question that all three refurbs were interior. See below in red bold. Exterior didn't come up until the original schedule was questioned.

Not to beat a dead horse, but I've seen mention of Marriott's $20k cost to refurbish a unit used a few times as a reason/excuse for high MF around here. Um, again, this is inconsistent with the facts and how Marriott manages hard/soft/building maintenance.

Generally, Marriott follows a 5/7/10 or 5/7/12 model:

Soft goods (mattress, pillows, etc) replaced every 5 years
Hard goods (furniture and such) replaced every 7 years
Interior refurbs and such (remodels) every 10 or 12 years

Let's give this a hypothetical cost of:

$5k for soft goods per 5 years
$10k for hard goods per 7 years
$20k for refurb per 10 years

So in a 10 year period, Marriott spends:

$5k + $5 + $10K + 1/2 $10K + $20K

Or a total of $45K on maintenance of a particular unit in 10 years.

Meanwhile, using a fairly typical $1500 MF per unit week (52 unit weeks per unit x $1500). Marriott collects MF of $78K per year or $780K over 10 years.

 

[Dean]

It was also implied by the original post in question that all three refurbs were interior. See below in red bold. Exterior didn't come up until the original schedule was questioned.

Is this a recent poster who has reregistered?

 

[pedro47]

I can remember when MF's were under $400 p/yr.

 

[Saintsfanfl]

Global Hotel Price inflation:

2014 1.8%
2015 2.6%
2016 2.5%
2017 2.5%
2018 3.7%

Now compare that to your maintenance fees. There are definitely some properties that were at or under the 2018 increase but the average overtime has always been higher than hotels. Someone can point to a specific nice hotel somewhere and show a huge increase between specific years but that does not equate to the overall reality.

 

[bazzap]

Global Hotel Price inflation:

2014 1.8%
2015 2.6%
2016 2.5%
2017 2.5%
2018 3.7%

Now compare that to your maintenance fees. There are definitely some properties that were at or under the 2018 increase but the average overtime has always been higher than hotels. Someone can point to a specific nice hotel somewhere and show a huge increase between specific years but that does not equate to the overall reality.

In 2018, there were more than 10x MVC resorts with MF increases below the 3.7% Hotel Price Inflation