2024 Maintenance Fees DISCUSSION THREAD

[timsi]

The association meeting is early next month. If they approve the fully funded budget, fees increase to 82.4 cents per point, up 20.5%. If they go with the alternate budget that waives full funding which is what normally happens, it will be 78.74 cents, up 15.1%. The email cites the following factors contributing to the increase:

"1) Labor – there are still multiple markets with large increases in wages and benefits.

2) Reserves - Significant increases due to inflation, labor, infrastructure and, for only those underlying component associations in Florida, Florida Senate Bill 154.

3) Insurance premium increase.

Also twenty (20) underlying component associations returned a portion of their prior year estimated surplus funds reducing their 2023 assessments. They are not forecasting an additional return of surplus funds in their 2024 budgets creating an additional increase in their respective maintenance fees."

Both budgets indicate club dues will increase to $240 for owner and select, $280 for executive and presidential and stay the same at $295 for chairman.

15%-20%? Wait a second, aren't all the owners supposed to deed back their weeks to buy trust points to avoid maintenance fee increases? Another obvious lie that did not survive.

 

[sponger76]

Why would Marriott want to lower it's revenues? They work for the best interest of their shareholders, not the owners.

Very true, but at some point they'd want to make sure that they don't have masses of owners who quit paying MFs because they've gotten too high. That would hurt their bottom line and therefore their shareholders just as much.

 

[aka Julie]

They could do away with some of the ”lame” activities and reduce the activities staff. we rarely attend, but I remember one activity we did attend at Shadowridge was a chocolate tasting. They were exactly 6 people there from that huge resort. Shadowridge has had a historically high % maintenance fee increase. This year’s was 15.2%. I shudder to think what next years will be. Every time I read their newsletter about planned work, I have to shake my head. Time to sell.

 

[dioxide45]

And to be fair, not all owners want those cuts to take place. All of that money is being spent on something, and for everything I might think "Well, that's dumb, we don't need that," someone else thinks "I want that, and will happily to pay for it."

For evidence, I only need to look at the kitchen renovation conversations that my dear spouse and I are having...

At times it is more than just specific tasks or expense items. Several years ago Grande Vista spent tens of thousands on a towel folding maching. This would allow them to turn pool towels over faster and require less staff to manually fold towels. I asked the BOD at the BOD meeting if that would result in fewer staff overall and lower cost. The answer was no. So they spent the tens of thousands of dollars, but it didn't save any money. They also installed self serve Towel Tracker machines, that meant no one had to man a towel hut all day. Were there any cost savings, well there could have been but I doubt they reduced overall staff.

 

[echino]

Very true, but at some point they'd want to make sure that they don't have masses of owners who quit paying MFs because they've gotten too high. That would hurt their bottom line and therefore their shareholders just as much.

MF delinquencies are not the developer's problem. It's owners' problem. Bad debt just gets added to the fees for the remaining owners to cover. Developer is getting its management fee anyway.

 

[cubigbird]

Very true, but at some point they'd want to make sure that they don't have masses of owners who quit paying MFs because they've gotten too high. That would hurt their bottom line and therefore their shareholders just as much.

We could see that result start to play out more with such substantial increases coming from 2024 assessment.

 

[bazzap]

MF delinquencies are not the developer's problem. It's owners' problem. Bad debt just gets added to the fees for the remaining owners to cover. Developer is getting its management fee anyway.

I am not sure that is necessarily always true, not for all MVC resorts anyway.
Certainly for some MVC resorts, when owners have been delinquent, MVC have taken over ownership and responsibility for those weeks and payment of the associated Maintenance Fees (at least until they resell those weeks or where they can convey them to the Trust)
Meanwhile though they have rented out those weeks to recover their costs and probably make a profit too.

 

[dioxide45]

Tha

I am not sure that is necessarily always true, not for all MVC resorts anyway.
Certainly for some MVC resorts, when owners have been delinquent, MVC have taken over ownership and responsibility for those weeks and payment of the associated Maintenance Fees (at least until they resell those weeks or where they can convey them to the Trust)
Meanwhile though they have rented out those weeks to recover their costs and probably make a profit too.

That does happen at a lot of resorts in the USA too. Individual HOAs have programs setup with MVC to turn the weeks over to MVC and MVC makes them whole on lost fees. Marriott can then convey the weeks to the trust and sell the points. I doubt it works the same for points though. What happens with point deeds that are foreclosed on? If they were a year in default, does MVC cover those fees for the trust?

 

[Fasttr]

MF delinquencies are not the developer's problem. It's owners' problem. Bad debt just gets added to the fees for the remaining owners to cover. Developer is getting its management fee anyway.

Bad Debt Expense is $12.3M in the Trust budget.

That amounts to $51 for a Trust points package of 3,000 points.

Not insignificant for sure.

 

[frank808]

At times it is more than just specific tasks or expense items. Several years ago Grande Vista spent tens of thousands on a towel folding maching. This would allow them to turn pool towels over faster and require less staff to manually fold towels. I asked the BOD at the BOD meeting if that would result in fewer staff overall and lower cost. The answer was no. So they spent the tens of thousands of dollars, but it didn't save any money. They also installed self serve Towel Tracker machines, that meant no one had to man a towel hut all day. Were there any cost savings, well there could have been but I doubt they reduced overall staff.

And for the whole time we were a Grand Vista there were no towels except one night. Called in a couple times and was told towels will be coming. Hour later for a few nights and no towels. Go figure why spend all that money when it has done nothing.

 

[dioxide45]

And for the whole time we were a Grand Vista there were no towels except one night. Called in a couple times and was told towels will be coming. Hour later for a few nights and no towels. Go figure why spend all that money when it has done nothing.

What time of year were you there? You are referring to pool towels? I suspect the issue is the cheap piece of crap towels they use. So people need to take three or four per person. We had the issue at Shadow Ridge. The towels are so thin that they are soaked through after one time drying off. At Shadow Ridge this is a bigger issue because there is no pool side towel exchange.

 

[Eric B]

just saw the post regarding westin aventuras fees going up 22.5%?

could we be seeing these sorts of increases across the board for 2024? yikes

Not across the board — just got the bill for an independent I own in Belize and they are not raising the 2024 MFs but keeping them the same as 2023.

 

[timsi]

Bad Debt Expense is $12.3M in the Trust budget.

That amounts to $51 for a Trust points package of 3,000 points.

Not insignificant for sure.

1.7% is not insignificant, but it is not significantly different from the historical average, so it is not an important contributor to the increase especially given that the association can rent the equivalent condo units for a profit.

 

[sponger76]

the association can rent the equivalent condo units for a profit.

Not always. There are a ton of locations and/or times of year where, if they do rent, they go for below MFs.

 

[timsi]

Not always. There are a ton of locations and/or times of year where, if they do rent, they go for below MFs.

Marriott manages to make money with their rental inventory so I assume the same should be true about the associations.

 

[sponger76]

Marriott manages to make money with their rental inventory so I assume the same should be true about the associations.

Well, you know that they say about when you assume things...

 

[bobpark56]

Re assessments for Mexico resorts: A 20% or so increase is to be expected when the US $ falls more than 15% facing the Peso, especially when allowing also for the inflation that has hit both countries. So no assessment tears here.

[Moderator Note: Reported political comment deleted.] <--- SueDonJ

 

[amluckau]

Owners really need to start putting pressure on the BOA's to start controlling expenses better. There are several potential areas to reduce spending, but MVC has no incentive to do so because they collect their 10% management. I've noticed large increases for activities MF's in the past few years and that is one area for potential reductions that would also lower the HR and staffing costs. Most activities should require guest fees to cover the cost instead of giving away freebies to boost the guest ratings. Children's activities can be reduced during the week when schools are in session. Owner services costs also keep increasing despite to reduction of service. MVC is treating owners similar to the way the hotel corporation treats its property owners.

But aren’t the board directors mostly Marriott staff?

 

[THSMTHS]

The association meeting is early next month. If they approve the fully funded budget, fees increase to 82.4 cents per point, up 20.5%. If they go with the alternate budget that waives full funding which is what normally happens, it will be 78.74 cents, up 15.1%. The email cites the following factors contributing to the increase:

"1) Labor – there are still multiple markets with large increases in wages and benefits.

2) Reserves - Significant increases due to inflation, labor, infrastructure and, for only those underlying component associations in Florida, Florida Senate Bill 154.

3) Insurance premium increase.

Also twenty (20) underlying component associations returned a portion of their prior year estimated surplus funds reducing their 2023 assessments. They are not forecasting an additional return of surplus funds in their 2024 budgets creating an additional increase in their respective maintenance fees."

Both budgets indicate club dues will increase to $240 for owner and select, $280 for executive and presidential and stay the same at $295 for chairman.

For what it is worth, I understand having a reserve and insurance increases. Not sure why it would be less for timeshares then personal. (Our personal insurance went up 15% this past year.) As for reserves, our HOA decided not to fund the yearly recommended amounts, kept maintenance fees the same for over 8 yrs. and kept kicking the can down the road for projects. We are now at the end of the road and it is ugly. It is going to be difficult to ask owners for additional funds.

 

[JLeckinger]

This post is not necessarily perfectly aligned with the discussion above. But ... we all should know that Trust Points are one of the more expensive ways (from an annual maintenance fee stand point at least) to access the MVC System. I own both deeded, enrolled weeks and a few Trust Points to grant me access to that program (fortunately I purchased those in a secondary market transaction - a long time ago - when I was allowed to pay the "junk" fees and add them seamlessly to my account). But, that is all another topic. My point here is that the maintenance fee cost / MVC Point for my collection of trust points is = $0.76 / MVC Trust Point (2023 dues) while my deeded property maintenance fee costs range from $0.35 - $0.58 / MVC Point (i.e., own at Grande Vista, Newport Coast, Ko Olina, and Aruba Surf Club).

 

[THSMTHS]

Welcome to 2023. For most of the last 20 years or so, we have been spoiled by consistently low inflation. That all changed after the pandemic with a combination of enormous fiscal stimulus and supply chain constraints. Those of us who lived through the 1970s and early 1980s have seen this movie before. Once inflation gets pumping, it's really hard to stop the cycle. See the link below from he Federal Reserve.

The Great Inflation

Some of us have adjusted to stateside travel. After being caught in Canada, with Covid last June, am very reticent to travel outside of the country. In Canada, ten day quarantine. They checked almost every day to make sure we had not broken quarantine. It was $500,000 if you got caught breaking quarantine and $1,000,000 if you infected someone else breaking quarantine. Add to that being stuck in a hotel room, with room service instead of your own home and no access to your own doctors, not good. I don't want to come home in a box.

 

[timsi]

Well, you know that they say about when you assume things...

They say that when maintenance fees surge, owners start paying a lot more attention to these things

 

[dannybaker]

We have been Marriott owners for a long time and remember paying $674 per year for our two bedroom unit at Grande Vista. I thought that was very high price at the time. The massive price increases will lead to more people walking away from a luxury item.

 

[sponger76]

They say that when maintenance fees surge, owners start paying a lot more attention to these things

What does that have to do with the HOAs being able to make more money off of rentals? It actually makes it harder to make a profit on rentals if MF increases are higher than the increase in rents that renters are willing to pay.

Individual resort HOAs would have a much harder time making a profit off of room rentals compared to MVC as a whole. MVC has a much broader portfolio of resorts to rent from and a much higher volume of nights overall than an individual resort HOA that can only rent foreclosed weeks (typically a small proportion of the overall room nights) and only from their specific resort. MVCs diverse portfolio means that for the rentals where they lose money, they at least have a chance of making up for elsewhere on stays where they do make some profit. An individual HOA doesn't have that luxury, so if it's resort where the majority of rentals don't cover MFs, in addition to some of them not being rented at all (foreclosures are found much more often on undesirable locations or seasons/weeks), it's nearly impossible to break even much less post a profit.

 

[timsi]

What does that have to do with the HOAs being able to make more money off of rentals? It actually makes it harder to make a profit on rentals if MF increases are higher than the increase in rents that people are willing to pay.

Individual resort HOAs would have a much harder time making a profit off of room rentals compared to MVC as a whole. MVC has a much broader portfolio of resorts to rent from and a much higher volume of nights overall than an individual resort HOA that can only rent foreclosed weeks (typically a small proportion of the overall room nights) and only from their specific resort. MVCs diverse portfolio means that for the rentals where they lose money, they at least have a chance of making up for elsewhere on stays where they do make some profit. An individual HOA doesn't have that luxury, so if it's resort where the majority of rentals don't cover MFs, in addition to some of them not being rented at all (foreclosures are found much more often on undesirable locations or seasons/weeks), it's nearly impossible to break even much less post a profit.

You may have a point about individual resorts (we can elaborate at another time if you are right or not) but I thought we were talking about the Abound trust. Isn't that diversified enough? I think that the association can rent any unit.