Diamond Resort yrly maintenance fees?

[gypsygirl1]

We've bought 2 float/float through resale. They are not part of the Club and when booking a year in advance, we've been able to get ocean front units every time. You can still buy float/float resale for under $5000/week.

I am curious...what are the maintenance fees for Diamond Resorts? I believe they are points based?

DRI took over my Grand Monarch Vacations about 2 1/2 years ago. My timeshares are point based (443) and there are 9 resorts in my group to pick from over 2 years. My maintenance fee have sky rocketed to about $2500 per year! I have paid and additional fee of $40 (I think) to add to my options for travel through DRI. My points will give me about 2 1/2 - 3 weeks over two years depending on how I use them and where I stay.

 

[RLS50]

After doing some extensive reading over recent months from past and current DRI owners, and numerous before and after accounts about what happens after DRI takes over a resort, I am only left with the conclusion that DRI rapidly escalates maintenance fees for 2 primary reasons when they take over a legacy resort. (1.) Obviously to drive their corporate profits, since the majority of those increases don't appear to get re-invested in the resort or benefit owners. (2.) I believe it is possible they also may be doing it to support their sales goals of converting legacy owners to points? Reading or listening to the stories out of Virginia Beach reported by a number of owners is that the DRI sales people seem to be warning former Gold Key owners that they better pay tens of thousands to convert to points because maintenance fees are going to skyrocket under DRI and they are now doomed, as if somehow converting to points is the only way to save themselves from the inevitable. Each year MF's do indeed rise at the absurd rate of 10% the more the herd gets startled and scattered, and possibly you do end up scaring more people into points.

It all seems so Machiavellian.

 

[dougp26364]

Part of the rapidly escalating fee's are the cost of converting newly acquired resorts to DRI standards. That often includes replacing all the beds, linens, towels, upgrading kitchens and kitchen appliances et..... All to make the resorts conform to DRI standards. That takes a lot of money and that money comes from owners pockets, not DRI's.

But, DRI also has some very expensive management fee's, so your point about increasing revenue for DRI is valid. And new resort systems do bring new blood to the round table for sales conversion opportunities. DRI does a much better job of churning sales from existing owners than it does finding new owners off the streets.

 

[RLS50]

Doug,

No real disagreement as to their general approach...or at least their public justification of why they claim they have to rapidly increase MF costs. I know there was some truth to that when they took over resorts or systems in distress that had been neglected for years.

But in this case the resort already had millions in reserves, and the reserve amount of MF is still approx 14%, even after back to back 10% annual MF increases. That is the same approx reserves rate that the original developer used.

So far it is not clear how the increased costs have represented any actual tangible benefit to owners, or even non-owners. In fact services have been decreased, additional fees have increased, and unfortunately there has been significant turnover of key resort personnel over the last 12 months.

 

[dougp26364]

Doug,

No real disagreement as to their general approach...or at least their public justification of why they claim they have to rapidly increase MF costs. I know there was some truth to that when they took over resorts or systems in distress that had been neglected for years.

But in this case the resort already had millions in reserves, and the reserve amount of MF is still approx 14%, even after back to back 10% annual MF increases. That is the same approx reserves rate that the original developer used.

So far it is not clear how the increased costs have represented any actual tangible benefit to owners, or even non-owners. In fact services have been decreased, additional fees have increased, and unfortunately there has been significant turnover of key resort personnel over the last 12 months.

You've perfectly stated why we're no longer DRI owner/members. While it seems nearly all timeshare management companies play a financial shell game with owners money, DRI really does a number (no pun intended) on the owner/members pocketbook. I was never able to reconcile their charges against what they were providing. It was painfully apparent when comparing our 2 weeks ownership at Polo Towers against the financial statements provided by Marriott and Hilton for our ownerships in Las Vegas, with Marriott being directly behind/adjacent to Polo Towers. DRI's numbers just never did add up IMHO and, I'm convinced there was more than a little padding of the expenses going on. There was ABSOLUTELY no way Polo Towers, with the amenities it provided and the "quality" of their furnishings justified the $$ spent in comparison to MVC and HGVC.

When DRI bought out Sunterra, there was a lot of neglected maintenance that needed funding. However, it's entirely possible that DRI has learned from that experience and has decided to carry on the tradition of "upgrading" resorts, even when they don't require upgrading to DRI standards. Of course, not being an owner at many of these resorts, I have no factual basis on which to stand, only speculation.

Still, the comparison of DRI's expenses to MVC and HGVC expenses were very easy for me to hold up against one another as I was an owner at all three in Las Vegas. DRI was by fat the more expensive in ratio to quality and, again IMHO, there was little to no basis for their numbers. Thus, we got.

Granted one could make arguments against MVC and the cozy relationship that appears to exist between MVC and those they contract to provide goods/services. MVC has their preferred contractors and that's that as far as owners get a say in the matter.

 

[RLS50]

Doug,

I'm having the same problem. Just one example, under the legacy developer Housekeeping was a simple line item expense at about $1.4M. This was pretty consistent year over year.

The DRI budget now lists a 2017 charge of $1.3M for Housekeeping under Payroll and Related and an additional $1.4M charge for Housekeeping under the Operating Expenses portion of the budget. That amounts to almost double the simple line item charge related to Housekeeping that appeared under the Gold Key annual budgets? How can that be possible when DRI has actually eliminated daily Housekeeping at the resort and the resort was short staffed in that area for parts of 2016?

The same is true for expenses related to Porters/Front Desk, a charge that appears to have almost tripled under the new budget as listed.

This is in ADDITION to the huge fees for Management and Corporate overhead.

What am I missing?

 

[dougp26364]

Doug,

I'm having the same problem. Just one example, under the legacy developer Housekeeping was a simple line item expense at about $1.4M. This was pretty consistent year over year.

The DRI budget now lists a 2017 charge of $1.3M for Housekeeping under Payroll and Related and an additional $1.4M charge for Housekeeping under the Operating Expenses portion of the budget. That amounts to almost double the simple line item charge related to Housekeeping that appeared under the Gold Key annual budgets? How can that be possible when DRI has actually eliminated daily Housekeeping at the resort and the resort was short staffed in that area for parts of 2016?

The same is true for expenses related to Porters/Front Desk, a charge that appears to have almost tripled under the new budget as listed.

This is in ADDITION to the huge fees for Management and Corporate overhead.

What am I missing?

I don't think your missing a thing.

 

[youppi]

DRI payed $167.5 millions to acquire Gold Key. So, they want to recover their money quickly to be able to acquire another brand. So, they increase MF and push hard to convert week owners to points.
DRI payed $85 millions to acquire Club Intrawest, an almost sold out club. How do you think they will recover their money ? by digging in DRI members pockets.
Before that, DRI acquired Star Island, Aegean Blue, Pacific Monarch, Tempus, ILX and Sunterra. DRI spent a lot of money in acquisition and DRI members most pay for that.

 

[RLS50]

DRI payed $167.5 millions to acquire Gold Key. So, they want to recover their money quickly to be able to acquire another brand. So, they increase MF and push hard to convert week owners to points.
DRI payed $85 millions to acquire Club Intrawest, an almost sold out club. How do you think they will recover their money ? by digging in DRI members pockets.
Before that, DRI acquired Star Island, Aegean Blue, Pacific Monarch, Tempus, ILX and Sunterra. DRI spent a lot of money in acquisition and DRI members most pay for that.

I agree. But what I am talking about goes beyond that. There is no way they are spending almost $3M on Housekeeping related expenses (double the Gold Key rate) when they have actually reduced housekeeping services. It makes no sense.

That is why I actually hope I am missing something. It is one thing to pad the budget a bit, it is another to have line item expenses that have no basis in reality. It would undermine the credibility of the entire budget.

 

[youppi]

I agree. But what I am talking about goes beyond that. There is no way they are spending almost $3M on Housekeeping related expenses (double the Gold Key rate) when they have actually reduced housekeeping services. It makes no sense.

That is why I actually hope I am missing something. It is one thing to pad the budget a bit, it is another to have line item expenses that have no basis in reality. It would undermine the credibility of the entire budget.

I think that the problem is because the management fee is a percentage of the expense budget and not a flat fee that you see things ike that in the expense budget.
If DRI increase the expense budget by $1M at each resort and the management fee is 15% then they get $150,000 more per resort than if they didn't dope the expense budget. At the end of the year, you will have a surplus of $1M that you will be able to apply to the next year MF but you will never recover the 15% on that. 15% of $1M is $150,000 multiply by 100 resorts = $15M more in DRI pockets per year. by doping the expense budget

If I remember, surplus use from previous year are applied in the incoming column of the current year and not in the expense column as a negative value. So, the surplus will be subtract after the management fee applied on the expense budget to get the Maintenance Fee to pay.

 

[RLS50]

I think that the problem is because the management fee is a percentage of the expense budget and not a flat fee that you see things ike that in the expense budget.
If DRI increase the expense budget by $1M at each resort and the management fee is 15% then they get $150,000 more per resort than if they didn't dope the expense budget. At the end of the year, you will have a surplus of $1M that you will be able to apply to the next year MF but you will never recover the 15% on that. 15% of $1M is $150,000 multiply by 100 resorts = $15M more in DRI pockets per year. by doping the expense budget

If I remember, surplus use from previous year are applied in the incoming column of the current year and not in the expense column as a negative value. So, the surplus will be subtract after the management fee applied on the expense budget to get the Maintenance Fee to pay.

Yes, I am familiar with the ex-CEO's comments to analysts where he seemed almost proud that annual budget increases with their 15% fee was almost pure profit for them.

But assuming the scenario you lay out above was true for argument's sake, would it not be a violation of fiduciary responsibilities for any management company to intentionally and willfully pad a budget with wildly excessive and inaccurate line item expenses all in an effort generate additional profits (without corresponding transparency to owners)?

 

[youppi]

Yes, I am familiar with the ex-CEO's comments to analysts where he seemed almost proud that annual budget increases with their 15% fee was almost pure profit for them.

But assuming the scenario you lay out above was true for argument's sake, would it not be a violation of fiduciary responsibilities for any management company to intentionally and willfully pad a budget with wildly excessive and inaccurate line item expenses all in an effort generate additional profits (without corresponding transparency to owners)?

May be but it is a budget so they have the right to make mistakes. It can be at their disadvantage too if they under estimate the budget. This is from the 2016 annual meeting of the HI Collection where Management fee is 15% of the Budget sum of Maintenance Fees and General & Administrative Fees.

I found something interesting today. We know that when DRI acquired Sunterra, they increased a lot the MF of HI and US Collections, the first 3 years after the acquisition but I never understand why in 2014 their was a big increase too. DRI completed their IPO in July 2013. So, 2014 was the first year of DRI as a public company. Is it a coincidence or not ?
This is the MF at both Collection for 15,000 points (Silver level):

 

[nuwermj]

We know that when DRI acquired Sunterra, they increased a lot the MF of HI and US Collections, the first 3 years after the acquisition but I never understand why in 2014 their was a big increase too. DRI completed their IPO in July 2013. So, 2014 was the first year of DRI as a public company. Is it a coincidence or not ?

Direct and indirect fees payed to The Club seem to be an increasingly important revenue stream for DRI. Especially since the IPO. This is from the 2014 cover letter (US Collection) to members. As your data show, the change was not zero sum.

"Enclosed you will find your 2014 annual assessment statement, along with a copy of the Association’s 2014 budget and Assessment Billing and Collection Policy. We have included a new expense line item in the 2014 budget to cover the cost of reservations and customer service. Previously this cost was included in THE Club annual dues; however, it has been determined that this is actually an expense directly related to our Association and not THE Club. We have more than 70,000 members of our Association and it is appropriate that our Association bear the cost of facilitating reservations and other communication expenses for our members. By increasing our Association budget to include these costs, THE Club is actually able to reduce its annual dues to our members.

"Your Base Standard Assessment for 2014 will be $215, and the fee per point for your Point Standard Assessment is 14.10 cents, but THE Club dues have been reduced from $299 to $204. To give you an example of the total impact on your fees, the aggregate 2014 fee combining the U.S. Collection fee and THE Club dues equates to a 0.59% increase in the total assessment for a member who owns 5,000 points, 5.68% for a member who owns 10,000 points, 8.10% for a member who owns 15,000 points and 9.52% for a member who owns 20,000 points. In previous years, THE Club dues included these services; however, since these services actually support the operation of the U.S. Collection, separate from operating THE Club, these fees have been attributed to the per point fee accordingly."

 

[Barb Smith]

DRI has a variety of ownerships. They can be fixed weeks, floating weeks, deeded weeks in their point system, or just points. The points have higher more flexibility, but also have higher fees because of the overhead.

 

[Barb Smith]

We just went to a high pressure meeting with Diamond International and bought a time share of 7,500 points per year for $28,000 with annual maintenance fees of $1,675 per year (which could go up). We have never had a timeshare before and are now questioning our decision. Are they legit? Should we cancel? Somebody please offer advice!

 

[taffy19]

We just went to a high pressure meeting with Diamond International and bought a time share of 7,500 points per year for $28,000 with annual maintenance fees of $1,675 per year (which could go up). We have never had a timeshare before and are now questioning our decision. Are they legit? Should we cancel? Somebody please offer advice!

If you are not sure what you bought or are having any doubts, rescind now and do not waste time. Follow the directions exactly that are in your package of papers that you signed and your contract will be rescinded plus you'll get all your money back guaranteed. This is the law.

PS. You only have a few days to do this in so do not procrastinate.

I am not sure if this is the company that hides the important piece of paper where you can sign the rescission letter document. One company used to hide it in the the binder that has a zipper but it is included in the package so they are legal. I will try to find the thread about it or other people can tell you this too.

Also, keep copies of everything yourself.

PPS. It was a different company by the name of Westgate (post #5) so disregard. Amazing what some companies will do to confuse timeshare buyers who have never heard of timeshares before and no wonder that this industry has such a bad name!

 

[artringwald]

We just went to a high pressure meeting with Diamond International and bought a time share of 7,500 points per year for $28,000 with annual maintenance fees of $1,675 per year (which could go up). We have never had a timeshare before and are now questioning our decision. Are they legit? Should we cancel? Somebody please offer advice!

Yes, the company is legit. Is it a good deal? I'll tell you our story and you can formulate your own answer. We found a Diamond resort we liked and bought a deeded week there for $1500. The annual maintenance fees are $1752/year. We can book oceanfront at that resort without any problem if week book a year in advance. To book an oceanfront week at the same resort would cost 15,500 points. Yes, points give you flexibility, but we can also put our deeded week into an exchange company (RCI or Interval International) any go to any resort in their system (they have many). My advice: look through your paper work for rescinding instructions, follow them very carefully, do not call DRI, and do not answer their calls. They'll just say whatever they can to talk you out of it.

 

[clifffaith]

We owned DRI US Collection and Hawaii. WE PAID THEM $500 to take back the two US Contracts last July. My advice to anyone contemplating a timeshare purchase is to buy almost anything else besides Diamond. If you happen to live on the west coast, Worldmark is awesome!

 

[Barb Smith]

So is this a sound investment? Or are my annual fees going to go up excessively to where it's a loosing pros position? I truly don't know anything about time shares. Are they scams?

 

[artringwald]

So is this a sound investment? Or are my annual fees going to go up excessively to where it's a loosing pros position? I truly don't know anything about time shares. Are they scams?

They aren't scams, but the purchase price from the developer is extremely overpriced for the value.

 

[clifffaith]

So is this a sound investment? Or are my annual fees going to go up excessively to where it's a loosing pros position? I truly don't know anything about time shares. Are they scams?

I think the general consensus is that Diamond's maint. fees tend to be higher. Our timeshares "made us go" -- we have our own business and rarely took time off for vacation until buying our first timeshare in 2002. From that standpoint it was a good decision to buy. However we have never bought resale (having only discovered TUG about a year ago), so I groan thinking of the tens of thousands of dollars we spent buying from the developers. My advice is to rescind the contract NOW if you are still in the rescission period (usually 5-10 days depending on where purchased). Then spend lots of time on TUG learning first about various timeshare systems, then second about buying resale. Believe me Diamond will happily take your money in a few months if you decide you want to go with them.

 

[Egret1986]

We just went to a high pressure meeting with Diamond International and bought a time share of 7,500 points per year for $28,000 with annual maintenance fees of $1,675 per year (which could go up). We have never had a timeshare before and are now questioning our decision. Are they legit? Should we cancel? Somebody please offer advice!

You were blessed to find TUG and have the opportunity to rescind! You did not get a good deal. Like what has previously been mentioned, DRI timeshare owners are paying to give their timeshares back just to be out from under these ever increasing fees. Timeshares should never be considered an investment (financial). Sound? Noooooooooo, it's not a sound investment. Get your $28,000 back before it's too late and learn about timeshare ownership before proceeding once again into the unknown. "....which could go up." There is no double they WILL go up. DRI is legit. CANCEL! You're not going to get any other advice on this purchase. RESCIND while you still have the opportunity.

Welcome to TUG!!!! Today's your lucky day. You found TUG before it was too late. ACT NOW!

 

[TUGBrian]

We just went to a high pressure meeting with Diamond International and bought a time share of 7,500 points per year for $28,000 with annual maintenance fees of $1,675 per year (which could go up). We have never had a timeshare before and are now questioning our decision. Are they legit? Should we cancel? Somebody please offer advice!

holy smokes, you are quite lucky (assuming you are still within your rescission period)...you just paid $28,000 bucks for something you could likely pick up on the resale market from an existing owner for literally $1.

so congrats, you just saved $28grand!

 

[geist1223]

While the cost of acquiring from DRI is high there are some benefits. The primary reason is the ability to Book directly outside your Collection without having to work a trade thru RCI, II, etc. However the way to work it is to buy let's say 10,000 DRI Points on the Secondary Market. Then you buy 5,000 Points from DRI in the same Collection. As part of that purchase from DRI you negotiate for your 10,000 resell Points to be brought into your account as if they had been bought from DRI.

 

[Queen50]

Oh ya!!! Big maintenance fees with them and the costs go up every year!

I agree! The cost of maintenance for Diamond is ridiculous!! We pay and can never get into the resorts we want. I live in California. want to travel just a few hrs. to a beach resort and honestly have only been able to reserve it once!!! And that was in the winter. Stay away from Diamond resorts.