2024 Maintenance Fees DISCUSSION THREAD

[sponger76]

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.

Uh, my "assume" comment was specifically because you said that since MVC can make money off of rentals that the individual HOAs should be able to also. Andno, associations can't just rent any unit they want. Typically, if resort documents allow HOAs to rent weeks they don't directly own, it's only much closer in to check-in. And at that point, any stays desirable enough that they would be profitable were booked by owners long before.

 

[timsi]

Uh, my "assume" comment was specifically because you said that since MVC can make money off of rentals that the individual HOAs should be able to also. Andno, associations can't just rent any unit they want. Typically, if resort documents allow HOAs to rent weeks they don't directly own, it's only much closer in to check-in. And at that point, any stays desirable enough that they would be profitable were booked by owners long before.

In general, I think HOAs can rent any delinquent unit at any time, not just last minute. I agree with you that not all resorts and seasons can be rented above maintenance fees, and some may even rent below cost (but can still recoup a good chunk of the losses). However, personally I haven't seen any resorts with healthy rental gains, even those that rent well above maintenance fees. But since we were discussing the Abound trust, we can cover this topic in other threads.

 

[lotus921v]

What percentage of point rentals are pure trust points? Many weeks owners have MF per point much lower than what the trust is and there are also some big mega renters with quartershares that have very low fees per point. I am sure their maintenance fees will also be going up since the trust is based on the fees of te underlying deeds. If those with low fees per point, they may still keep rental prices the same.

What is a quartershare? I’ve never heard that term before

 

[JIMinNC]

What is a quartershare? I’ve never heard that term before

Ritz Carlton Club sold quartershares in many if not all of the RCC locations. With a quartershare you own a quarter of a total unit - other other words, you own 13 weeks usage out of a 52 week year. Those can be elected for Abound Points - a BUNCH of Abound points.

 

[TravelTime]

When I evaluate my timeshare MFs, I compare to similar places to stay rather than how much the MFs have increased. 15% to 20% increases might be okay if I compare to where I would choose to stay if I did not have a timeshare. It would probably end up being a hotel room for $1000+ per night.

 

[dioxide45]

But aren’t the board directors mostly Marriott staff?

The BOD for the trust is, but for individual resorts they are mostly just other owners like you and I. They may be on "friendly terms" with Marriott and these BOD always have a nominating committee for who ghets on the ballot. I don't know how much influence Marriott has in who gets selected, but I think that if someone has enough experience for what they are looking for in a board member, they are likely to get on the ballot. Marriott does however carry a lot of weight with voting on each individual resort HOA since the trust owns a lot of weeks and owners for the most part don't participate. Since Marriott can vote in a block and the rest of the owners fracture their vote, it is probably most often that Marriott's selection wins the vote. Marriott won't want to vote for an incumbent who was hostile to Marriott during their term and would likely vote them out. This happened about 12 or so years ago at Grande Vista.

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).

If you own a Platinum or other high season week, you will most often find that MF per point will be lower than trust point fees. However, not everyone owns Platinum weeks. For many gold season weeks the fees come out the same or higher than Trust points. There are probably more gold and lower season weeks overall in the entire system, so the trust will tend to weigh heavier with these types of weeks, pushing up the MF per point in the trust.

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.

When we bought Grande Vista back in 2007 I recall the MF on our 2BR lock off to be just a little over $700.

Ritz Carlton Club sold quartershares in many if not all of the RCC locations. With a quartershare you own a quarter of a total unit - other other words, you own 13 weeks usage out of a 52 week year. Those can be elected for Abound Points - a BUNCH of Abound points.

I beleive it was actually Marriott Grand Residence? Looking at some old trust conveyances, I see 1/4th and 5/52nd fractionals at Grande Residence but RCC only shows 1/12th. I beleive is is those 1/4th that are the quartershares at Grand Residence. A quartershare would be 13 weeks if I understand correctly.

 

[JIMinNC]

I beleive it was actually Marriott Grand Residence? Looking at some old trust conveyances, I see 1/4th and 5/52nd fractionals at Grande Residence but RCC only shows 1/12th. I beleive is is those 1/4th that are the quartershares at Grand Residence. A quartershare would be 13 weeks if I understand correctly.

You are probably right. All of that predates my ownership with MVC, which didn't begin until 2014, so I've never totally understood the structures of those higher end programs they used to sell like Grand Residence and RCC.

 

[boraxo]

Not a shocker with inflation hitting labor and insurance hard, which are major expense categories. I think this also shows why points can be inferior to deeded ownership. The latter are tagged to a specific property where the Board can control expenses and where one property does not subsidize others. in a points system you are at the mercy of the company selling points, and the high-insurance high-repair costs in the hurricane zone may be subsidized by those who don't face these perils. And of course owners can toss MVC management if they are dissatisfied with performance (see e.g. HRC Aspen).

 

[timsi]

Not a shocker with inflation hitting labor and insurance hard, which are major expense categories. I think this also shows why points can be inferior to deeded ownership. The latter are tagged to a specific property where the Board can control expenses and where one property does not subsidize others. in a points system you are at the mercy of the company selling points, and the high-insurance high-repair costs in the hurricane zone may be subsidized by those who don't face these perils. And of course owners can toss MVC management if they are dissatisfied with performance (see e.g. HRC Aspen).

The inflation in the hospitality business may not be as high as we may think. According to this article: "Adjusting hotel price data for inflation reveals that U.S. hotels have regained pre-pandemic rates in real terms but little more. In fact, far from price gouging, hotels have taken almost no price increase in real terms."

Yes, Hotel Room Rates Are Up. But It Isn’t Price Gouging.

Hotel prices may feel high but adjusted for inflation, the price of travel services is flat or down versus 2019.

skift.com

Perhaps resorts have been able to increase the prices more because people were eager to travel after Covid while the regular hotels could not since they need businesses to go back to the pre-pandemic levels.

 

[dioxide45]

The inflation in the hospitality business may not be as high as we may think. According to this article: "Adjusting hotel price data for inflation reveals that U.S. hotels have regained pre-pandemic rates in real terms but little more. In fact, far from price gouging, hotels have taken almost no price increase in real terms."

Yes, Hotel Room Rates Are Up. But It Isn’t Price Gouging.

Hotel prices may feel high but adjusted for inflation, the price of travel services is flat or down versus 2019.

skift.com

Perhaps resorts have been able to increase the prices more because people were eager to travel after Covid while the regular hotels could not since they need businesses to go back to the pre-pandemic levels.

The economics of hotel pricing is far different than timeshare. Timeshare MFs are based on actual costs of operations. Hotel is supply and demand. A hotel can withstand a short period of time where they reduce nightly rates and lose money. Timeshare doesn't have the same luxury.

 

[timsi]

The economics of hotel pricing is far different than timeshare. Timeshare MFs are based on actual costs of operations. Hotel is supply and demand. A hotel can withstand a short period of time where they reduce nightly rates and lose money. Timeshare doesn't have the same luxury.

Still the cost inflation must be very similar and the hotels cannot stand losses for long. The article covered a period of about 4 years not 4 months.

 

[cubigbird]

Reading stories on some Facebook forums where some folks were either sold into buying Club Points or trading an ownership and “upgrading” into Club Points on the premise of no MF increases. I’m guessing that sales tactic has mysteriously ended.

 

[JLeckinger]

If you own a Platinum or other high season week, you will most often find that MF per point will be lower than trust point fees. However, not everyone owns Platinum weeks. For many gold season weeks the fees come out the same or higher than Trust points. There are probably more gold and lower season weeks overall in the entire system, so the trust will tend to weigh heavier with these types of weeks, pushing up the MF per point in the trust.

Totally agree with what you are saying but there is an important implication here for those looking to acquire "usage time" in the MVC System. If you can find a high season deeded offering - President's Day Week, Christmas / New Years Week, etc. - those can offer "value" as an acquisition candidate. I believe maintenance fees are not impacted by these "seasonal differences at each resort". So, you are going to get the best "bang" (highest MVC point total) for your maintenance fee "buck" by owning these premium season times. Since you are paying maintenance fees every year, generally for a long time period, at some point the maintenance fee savings of a higher point / high season property creates a large ongoing cost advantage. This does not take into account the normal advantage of EASIER use of the subject property at a known peak / prime time. I have found the MF / MVC point advantage, over a reasonable usage time period, more than swamps the lower initial cost advantage of the lower season (gold) offerings. Yes, as we all know, pricing in the time-share market is pretty inefficient! The other thing I am learning is that buying Trust Points, due to their higher MF / MVC point issue is an inefficient total cost option.

 

[superfriend620]

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.

Agreed I didn't need 4 hours of a foam shooting cannon during my week at Marco Island. Alot of the activities and all the noise is just ridiculous overkill

 

[DRH90277]

When I evaluate my timeshare MFs, I compare to similar places to stay rather than how much the MFs have increased. 15% to 20% increases might be okay if I compare to where I would choose to stay if I did not have a timeshare. It would probably end up being a hotel room for $1000+ per night.

Well, you could say that. I suspect very few owners are in the $1,000 hotel room cloud. But, considering the initial buy-in and the ever-increasing maintenance fees you may get there anyway.

Consider the math for a typical week stay requiring 5,000 points - Buy 5,000 points @ $16 per point = $80,000 (pre discount). Pay maintenance fees on 5,000 points at $.86 per point = $4,300 per year. Cost per night in maintenance fees alone are $4,300/7 = $615 per night. Oh no! - You are over the $1,000 per night already if you consider the added initial outlay with a 20 year amortization - $80,000/20 yrs = $4,000 per year or an extra $571 per night.

Please check my math - current annual imputed cost even seems high to me. My wife told me to rescind that points deal - please don't tell her I was wrong.

 

[TravelTime]

Well, you could say that. I suspect very few owners are in the $1,000 hotel room cloud. But, considering the initial buy-in and the ever-increasing maintenance fees you may get there anyway.

Consider the math for a typical week stay requiring 5,000 points - Buy 5,000 points @ $16 per point = $80,000 (pre discount). Pay maintenance fees on 5,000 points at $.86 per point = $4,300 per year. Cost per night in maintenance fees alone are $4,300/7 = $615 per night. Oh no! - You are over the $1,000 per night already if you consider the added initial outlay with a 20 year amortization - $80,000/20 yrs = $4,000 per year or an extra $571 per night.

Please check my math - current annual imputed cost even seems high to me. My wife told me to rescind that points deal - please don't tell her I was wrong.

I think your wife was right to rescind if you are paying the costs you quoted.

A couple of things about your analysis, at least for me:
1) I paid $5 pp resale, not $16 pp (actually less pp when I include that my WKOVRN was enrolled for free).
2) There is a residual value left when you are ready to sell your timeshares back so perhaps you should not assume you would get nothing back.
3) My average MF is $0.54 pp but let’s say it is $0.62 after the increase.
4) $1000 is retail for a hotel room. If I were to rent a comparable 2BR at retail, it would likely be $1500 - $2000 per night.
5) I am Chairman’s Club level so I get extra perks that save money both on the timeshare and hotel side. For example, I just stayed at St Regis in a 1BR suite for free which costs $11,000 cash.

Some people might say #3 is inaccurate because I am comparing retail to what you can get on Redweek renting from an owner. I compare to retail because I would not rent from an owner.

So this is just my value proposition. Others will look at it different, as you did.

 

[vacationtime1]

Well, you could say that. I suspect very few owners are in the $1,000 hotel room cloud. But, considering the initial buy-in and the ever-increasing maintenance fees you may get there anyway.

Consider the math for a typical week stay requiring 5,000 points - Buy 5,000 points @ $16 per point = $80,000 (pre discount). Pay maintenance fees on 5,000 points at $.86 per point = $4,300 per year. Cost per night in maintenance fees alone are $4,300/7 = $615 per night. Oh no! - You are over the $1,000 per night already if you consider the added initial outlay with a 20 year amortization - $80,000/20 yrs = $4,000 per year or an extra $571 per night.

Please check my math - current annual imputed cost even seems high to me. My wife told me to rescind that points deal - please don't tell her I was wrong.

Rescind.

Points -- even when purchased resale -- are seldom a cost efficient way to stay for a week at a high end timeshare (i.e. one that costs 5000 points/week as in your example). Points are useful for partial weeks, off season vacations, and flexibility, but a resale legacy week will almost always be cheaper when they are available at the resorts you want to stay at.

 

[dioxide45]

Well, you could say that. I suspect very few owners are in the $1,000 hotel room cloud. But, considering the initial buy-in and the ever-increasing maintenance fees you may get there anyway.

Consider the math for a typical week stay requiring 5,000 points - Buy 5,000 points @ $16 per point = $80,000 (pre discount). Pay maintenance fees on 5,000 points at $.86 per point = $4,300 per year. Cost per night in maintenance fees alone are $4,300/7 = $615 per night. Oh no! - You are over the $1,000 per night already if you consider the added initial outlay with a 20 year amortization - $80,000/20 yrs = $4,000 per year or an extra $571 per night.

Please check my math - current annual imputed cost even seems high to me. My wife told me to rescind that points deal - please don't tell her I was wrong.

I ran the numbers through my Point Purchase Calculator and a 5,000 point purchase over 30 years looks to be about $880 a night based on the alternate budget! That is if you can get 10 nights out of 5,000 points. Something that should be doable. The cost of retail trust points is expensive. Those comparing to enrolled weeks doesn't really help because for the most part one needs to make a big point purchase to enroll them, wiping out any savings they may to be getting.

 

[DRH90277]

I think you wife was right to rescind if you are paying the costs you quoted.

A couple of things about your analysis, at least for me:
1) I paid $5 pp resale, not $16 pp (actually less pp when I include that my WKOVRN was enrolled for free).
2) There is a residual value left when you are ready to sell your timeshares back so perhaps you should not assume you would get nothing back.
3) My average MF is $0.54 pp but let’s say it is $0.62 after the increase.
4) $1000 is retail for a hotel room. If I were to rent a comparable 2BR at retail, it would likely be $1500 - $2000 per night.
5) I am Chairman’s Club level so I get extra perks that save money both on the timeshare and hotel side. For example, I just stayed at St Regis in a 1BR suite for free which costs $11,000 cash.

Some people might say #3 is inaccurate because I am comparing retail to what you can get on Redweek renting from an owner. I compare to retail because I would not rent from an owner.

So this is just my value proposition. Others will look at it different, as you did.

TravelTime - I was hoping you would find an error in my numbers as I couldn't believe it could be so bad.

It's ok, I too am Chairman's Club and have several resale purchases. I won't dispute your use of historical costs and maintenance fees on your resale purchases. Your view is that each of us has a different cost structure for our timeshare use depending on how and when we purchased.

An example - I have farmland I purchased 40 years ago for $250 per acre (now worth $15,000+ per acre). Should I disregard the current economic value of the land as I look at any profits?

Caution -- My point is the current program is terrible in terms of the cost, even compared to deluxe hotel rooms. Sales personnel cannot tell me of the bargain in relation to hotel stays - it's gone. But the current points program is what is being sold by MVC.

Good discussion and thanks,

 

[TravelTime]

TravelTime - I was hoping you would find an error in my numbers as I couldn't believe it could be so bad.

It's ok, I too am Chairman's Club and have several resale purchases. I won't dispute your use of historical costs and maintenance fees on your resale purchases. Your view is that each of us has a different cost structure for our timeshare use depending on how and when we purchased.

An example - I have farmland I purchased 40 years ago for $250 per acre (now worth $15,000+ per acre). Should I disregard the current economic value of the land as I look at any profits?

Caution -- My point is the current program is terrible in terms of the cost, even compared to deluxe hotel rooms. Sales personnel cannot tell me of the bargain in relation to hotel stays - it's gone. But the current points program is what is being sold by MVC.

Good discussion and thanks,

Yes your analysis is close to accurate for new points buyers who purchase retail and for whom all MFs are based on pure trust points. I would have argued that the value proposition for purchasing retail was gone a long long time ago.

 

[b2bailey]

After resisting every offer to join the points family, I was almost convinced at my "owner's update" at Newport Coast. After reading this -- I'm glad I'm still just a "legacy weeks" owner.

 

[THSMTHS]

Excerpts from MVC email received on Trust points proposed budget.... This is always an early read on how big MF increases at the weeks may average this year....and its another doozy.

The projected increase in the “Alternative Budget” is $.079 per point which represents a 15.1% increase.

Please pay particular attention to the reserve funding line item on the enclosed “Proposed Budget”. The State of Florida requires MVC Trust Association to submit a Proposed Budget to you with a reserve funding amount that represents reserves which are “fully funded” based on statutory formula, unless the Owners vote to waive or reduce the reserve funding as permitted by the State of Florida. Therefore, the enclosed Proposed Budget includes reserves of $8.43 per beneficial interest, an amount which provides for reserves which are “fully funded” in accordance with the statutory formula. MVC Trust Association is required to fully fund the difference between a component association’s fully funded reserve amounts and that component association’s waived reserves amount unless MVC Trust Association Owners waive fully funding. In 2023, the underlying component associations’ owners waived fully funding within their budgets and the “Proposed Budget” reserves estimate is based on the 2023 actual difference of fully funding plus an inflation factor for 2024.

Also enclosed is an “Alternative Budget” that is not officially proposed but will be considered should MVC Trust Association Owners elect to waive fully funding. The Board is authorized to potentially lower the reserve funding amount below the amount shown in the Proposed Budget only if a majority of Owners vote “yes” to waive or reduce the “fully funded” reserve funding shown in the Proposed Budget. The Board may also determine to provide increased reserve funding in the final budget. The Board of Directors reviews the Association’s reserve funding needs on a regular basis and will do so again at this meeting. The goal has been and remains to maintain a balanced approach in reserve contributions versus projected expenditures for the Association.

For 2024 the enclosed “Proposed Budget” reflects that the MVC Trust Association maintenance fees to be paid to the underlying component associations are projected to have a 14.3% increase over the 2023 MVC Trust Association budget. This amount is reflected in the “Component Expense” line item of the 2024 MVC Trust Association “Proposed Budget” which you will note is approximately 85% of the total budgeted expenses for MVC Trust Association.

Some of the challenges faced by the underlying component associations which contributed to their maintenance fee increases include:

• Labor – there are still multiple markets with large increases in wages and benefits.
• Reserves - Significant increases due to inflation, labor, infrastructure and, for only those underlying component associations in Florida, Florida Senate Bill 154.
• Insurance premium increases.

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.

Ouch, up around $1000 for 162000 Vistana Flex. Based on what you all are saying Marriott is going to be another large ouch. Not good for us for sure.

 

[DeeCee]

After resisting every offer to join the points family, I was almost convinced at my "owner's update" at Newport Coast. After reading this -- I'm glad I'm still just a "legacy weeks" owner.

Me too

 

[dioxide45]

Got the proposed budget for Harbour Lake. It looks like the proposed operating fee is up 21%. I won't speak to the proposed reserve fee as that still includes fully funding reserves. But it certainly looks like the increase in fees for trust points this year is based on expected increases in fees for underlying weeks in 2024.

I've highlithed items that are up over 15%. I am not sure why there is a big increase for income tax. Did someone make an accounting error resulting in such a large amount of taxes to be paid by a non profit HOA?

 

[Fasttr]

Got the proposed budget for Harbour Lake. It looks like the proposed operating fee is up 21%. I won't speak to the proposed reserve fee as that still includes fully funding reserves. But it certainly looks like the increase in fees for trust points this year is based on expected increases in fees for underlying weeks in 2024.

I've highlithed items that are up over 15%. I am not sure why there is a big increase for income tax. Did someone make an accounting error resulting in such a large amount of taxes to be paid by a non profit HOA?
View attachment 81917

Wow...that's aggressive. The Component Expenses (underlying weeks MFs) portion of the trust budget was up 14.4%....so this appears to be on the steep side of the expected resort average.