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How is a resort is run/managed?

FlyerBobcat

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I was reading the "Maui Ocean Club mug" thread re: "buying/selling of mugs", and saw a comment saying
"...others will say your MF will go up if you do..."
This bought a few question to mind related to my lack of understand on how a resort is run/managed. (These question may apply to other "systems", but I'm mainly interested in the specifics of the Marriott system.)

Here goes...
Associated with a given resort, I see 3 major players:

  • The HOA, which is headed up by the BOD.
  • The resort management company
  • The developer
First of all (in Marriott's case) I think that the "developer" and the "resort management company" are the same entity -- but this does not HAVE to be the case. In that correct?

The questions below are intended to help me understand how a resort runs from a business point-of-view. I'm sure there is other information that is relevent, so please include anything that might be useful.

[Note: I might have a good guess at a few of these, but wanted to ask to be sure my assumptions are correct.]


  1. Who sets annual the MFs level?
  2. Who sets the periodic assessments?
  3. Is the management company the entity that collects these fees directly from the owners?
  4. Does the management company get a set amount (or set %) of MFs?
  5. Am I correct in assuming that the management company has its own employees working there (e.g. MVCI employees at the check-in desk), as oppose to HOA hiring hiring/paying these workers?
  6. Are there any other revenue sources (other than from owners' MFs and assessments), say from the "developer" and/or the "resort management company"?
  7. Where do the revenues (and profits) go for things such as:
    • Bike rentals
    • Beach item rentals
    • Bars
    • Restaurants
    • MarketPlace
    • Parking
  8. For unsold units that the developers still holds, are MFs (or some portion) paid by the developer?

Note that I'm a little new at TS thing. So even my assumptions my be wrong, so please correct me if they are. TIA
 
Last edited:

jimf41

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OK, I'll take a try at this. I can't speak for all Marriott T/S's but this is how it works at MFC and MPB.

1. The BOD/HOA
2. The BOD/HOA
3. Yes
4. Yes
5. Yes, as far as I know. There might be some employees directly paid by the BOD but I can't think of who they are offhand. The desk folks are all Marriott employee's.
6. Yes, Marriott sometimes rents space to outside vendors in and around the resort. Bike rentals at MPB would be a good example. Marriott then pays the BOD back for the use of this space. At MFC we are still getting a developer subsidy. This will be phased out gradually as the resort is fully developed.
7. Not sure about this one. It depends on the agreement Marriott has with each resort.
8. Not sure if they actually pay MF's or some sort of subsidy but generally yes I would imagine.
 

FlyerBobcat

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Jim,

Thanks for that information.... Any others want to add something?:shrug:
 

tlwmkw

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The MF's are set by the BOD but with information, and suggestions, supplied by Marriott- the board are usually volunteers and don't crunch the numbers so really Marriott is setting the fee and the BOD is supposed to oversee the interests of the owners.

My understanding is that Marriott does pay MF's on the unsold units (at least that's what a salesman told me-so who knows if it is true). If they didn't there wouldn't be enough income for maintenance when the resorts initially open. However the initial MF's are often set quite low- perhaps so Marriott doesn't have to pay out as much?- and they provide a developer subsidy also. Once the resort sells out the MF's will usually rise to a level that will then allow for future renovations as well as ongoing maintenance.

I believe the other income (from the bike rentals, parking fees, vendors on site) is handled on a resort by resort basis and there is no fixed pattern.

Dave M. would be a great one to answer these questions but I believe he's off on a cruise from New Zealand to Australia.
 

davidvel

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The MF's are set by the BOD but with information, and suggestions, supplied by Marriott- the board are usually volunteers and don't crunch the numbers so really Marriott is setting the fee and the BOD is supposed to oversee the interests of the owners.
Partly true. The Board is stacked with Developer/Management co. employees. In reality Marriott controls the entire resort, its maintenance, expenses, management fees, etc.
However the initial MF's are often set quite low- perhaps so Marriott doesn't have to pay out as much?- and they provide a developer subsidy also. Once the resort sells out the MF's will usually rise to a level that will then allow for future renovations as well as ongoing maintenance.
The real reason for low maintenance fees/ subsidies is a way to disguise the true MF for potential purchasers. By providing subsidies (and only disclosing them way deep down in the paperwork), a potential buyer is told by the salesperson "the maintenance fees are only $600 a year. That's less than $50 a night if you lock your unit off and use two weeks year..."

Of course they fail to say "this is based upon a subsidy that will go away one day and your maintenance fees will rise to over $1,000 per year..."
 
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