- Nov 9, 2009
- Reaction score
- Fort Lee, NJ
I found out that while it is true that Starwood may try and rent out delinquent weeks, they come last in the order of priorities. The first ones to be rented out are from owners who are up-to-date in maintenance and decided to convert their week to Starpoints. The next ones along the same premise are people exchanging their week to stay at another Starwood resort using StarOptions. Finally, delinquent weeks are rented out. However, I understand that no delinquent weeks have been rented out at WSJ this past year. Apparently Starwood has concerns about the legality of renting out somebody's deeded unit without actually having their permission.
When I attended one of the Board Meetings, I asked a lot of questions about renting delinquent units. The answers were, unfortunately, less than satisfactory. It didn't seem if there was a true plan in place (and this is for one of the resorts with more demand than supply).
I was told:
-- They do attempt to rent delinquent owner weeks
-- Owners can show up for a reservation with a check in hand and they will be allowed in
The above two statements can't both be true (to some extent -- maybe -- but clearly there's an inconsistency as well).
I was also told that owners aren't "locked out" until maintenance fees are 90 days past due. So, it's quite easy for someone to use a unit in the first quarter and get away with not paying the fees.
Several people here on TUG have reported being able to deposit next year's usage without pre-paying maintenance fees. That may have been "owner friendly," but it's not good business in this economy. There was a recent report here on TUG that the policy was being changed to ensure estimated fees are collected in advance, but I haven't seen that independently verified by Starwood or by anyone who has tried to deposit. As I understand it, the rules were different (perhaps as set by the HOAs) for different resorts so until Starwood announces a formal policy change, I'm a little afraid that this might still be occuring.
I know all don't agree with me, but I think the liberal cancellation policy probably hurts the rental income potential. There's a much greater chance of another owner using time, or being able to rent it, if last-minute cancellations weren't being rewarded with a penalty-free II week. As I've stated in the past -- there might come a day when I too am happy about this policy, but I don't think it's beneficial to the ownership at large.
I suspect Starwood and the HOAs did not have their eyes on the ball in 2009. The Starwood representative present at the meeting admitted that they didn't see the delinquencies coming. (Was that a rookie error -- the first real down economy they've had to deal with in this segment of the hospitality business?) Unfortunately, that lack of attention ... lack of a real plan .... cost owners a significant amount of money for this year. Hopefully, there's been enough owner concern about increased maintenance fees to ensure that things will be better this year on the collection and rental front.
Ultimately, one has to believe that the extremely high maintenance fees are hurting developer sales -- maybe not as much as they're hurting resales -- but they certainly can't be helping. Higher maintenance fees means higher management fees for Starwood -- but also lower sales. Which one do we think is more important to them from a financial standpoint?