HRA Phase II 2025 PROPOSED Budget

[DanCali]

Not final yet, so I didn't post in the MF thread. Will probably just get rubber stamped...

This is insanity. Club dues excluded, the (proposed) total dues (MF + Vat + Atlantis fees) on the bottom line are about 19% higher than 2024 (which were 17% higher than 2023). This is probably in the range of Ritz Carlton Club fees.

(For what it's worth, the actual MF line, excluding VAT and Atlantis fees are about 23% higher).

This resort always had relatively high MFs, but the relatively nice thing about it was that the annual (percentage) increases were among the lowest in the system - in the range of 2.5% annualized over a period of 8-10 years. Right until MVCI took things over... then it all went nuts.

 

[dioxide45]

I don't like it when they don't put prior year line by line fees side by side to compare. Do you have that? If you could drop the 2024 budget here I could run it through OCR to put them side by side and show year over year increase in $ and %.

 

[DanCali]

I don't like it when they don't put prior year line by line fees side by side to compare. Do you have that? If you could drop the 2023 budget here I could run it through OCR to put them side by side and show year over year increase in $ and %.

Attached 2024 actual (it says "estimated", but is what was billed)

 

[dioxide45]

Well, that was a lot messier than I expected. The quality of the PDFs wasn't that great and there were a lot of errors. I tried to clean it up as best I could. Double check anything before commenting and I can update and repost'

	2024 APPROVED BU DGET TOTAL	2025 APPROVED BU DGET TOTAL	$	%
HARBORSIDE RESORT CONDOMINIUM II ASSOCIATION
Revenue
Condominium Maintenance Fee	7,911,807​	12,993,462​	5,081,655​	64.2%​
Bank/Investment Interest	27,918​	62,345​	34,427​	123.3%​
Total Maintenance Fee Revenue	7,939,525​	13,050,007​	5,110,482​	64.4%​
Expenses
Accounting	216,529​	216,792​	263​	0.1%​
Administration	599,482​	627,750​	28,268​	4.7%​
Audit Fee	7,500​	21,000​	13,500​	180.0%​
Bad Debt Expense	660,000​	1,678,728​	1,018,728​	154.4%​
Billing and Collections	44,911​	44,668​	-243​	-0.5%​
Board of Directors	0​	10,600​	10,600​
Cable Television	79,121​	79,116​	-5​	0.0%​
Deficit Recovery	0​	610,212​	610,212​
Electricity	63,494​	83,498​	20,004​	31.5%​
Gas	3,859​	4,391​	532​	13.8%​
Human Resources	109,948​	143,652​	33,704​	30.7%​
Insurance	268,780​	145,579​	-123,201​	-45.8%​
Legal	0​	6,621​	6,621​
Lose Prevention / Security	340,632​	356,563​	15,931​	4.7%​
Maintenance	150,975​	159,117​	8,142​	5.4%​
Management Fee	719,237​	1,181,224​	461,987​	64.2%​
Master Deciration	1,589,413​	1,253,058​	-336,355​	-21.2%​
Operating Capital	172,824​	0​	-172,824​	-100.0%​
Paradise Island Tourism Development Association Fee	64,586​	64,586​	0​	0.0%​
Pest Control	138​	132​	-6​	-4.3%​
Refuse Collection	750​	756​	6​	0.8%​
Water and Sewer	11,504​	13,124​	1,620​	14.1%​
HARBORSIDE RESORT II VACATION OWNERSHIP ASSOCIATION
Revenue
Vacation Ownership Maintenance Fees	13,788,938​	13,648,461​	-140,477​	-1.0%​
Bank/Investment Interest	228,085​	249,682​	21,597​	9.5%​
Late Fees	68,132​	61,987​	-6,145​	-9.0%​
Maintenance Fee Interest Income	114,688​	110,768​	-3,920​	-3.4%​
Misc Income	38,442​	44,530​	6,088​	15.8%​
Surplus Return	231,517​	0​	-231,517​	-100.0%​
Expenses
Administration	168,259​	208,940​	40,681​	24.2%​
Audit Fee	7,500​	21,000​	13,500​	180.0%​
Bad Debt Expense	1,660,000​	2,618,676​	958,676​	57.8%​
Credit Cod Fee	1,077,874​	447,685​	-630,189​	-58.5%​
Deficit Recovery	0​	871,570​	871,570​
Electricity	1,077,874​	1,206,203​	128,329​	11.9%​
Front Desk	990,521​	1,048,181​	57,660​	5.8%​
Gas	73,333​	83,523​	10,190​	13.9%​
Housekeeping	2,644,725​	2,109,955​	-534,770​	-20.2%​
insurance	967,703​	556,953​	-410,750​	-42.4%​
Legal	0​	5,826​	5,826​
Maintenance	739,426​	920,497​	181,071​	24.5%​
Management Fee	1,253,358​	1,240,769​	-12,589​	-1.0%​
Operating Capital	231,517​	542,651​	311,134​	134.4%​
Owner Services	318,997​	319,065​	68​	0.0%​
Pest Control	2,594​	2,592​	-2​	-0.1%​
Postage and Mailing	41,254​	35,919​	-5,335​	-12.9%​
Property Taxes	880,381​	960,292​	79,911​	9.1%​
Refuse Collection	14,265​	14,268​	3​	0.0%​
Water and Sewer	218,576​	249,368​	30,792​	14.1%​

 

[DanCali]

Thanks for doing that!

Bad debt expense up 58% is not a good sign.

Management fee up 64% shows who the big winner is...

This resort may be much better off disassociating with Marriott/Vistana and going off on its own. It used to have a high rental value relative to MFs but that's no longer the case. And most trades via Staroptions or Abound are a trade down in terms of MF value or rental value. The value is now mostly in its use.

 

[sponger76]

Bad debt expense up 58% is not a good sign.

Of all the Vistana resorts, Harborside is the one I see as most likely to go into a death spiral and eventually fail/close. They have the most insane MFs and people have a hard 'time even giving away those deeds.

 

[dioxide45]

Thanks for doing that!

Bad debt expense up 58% is not a good sign.

Management fee up 64% shows who the big winner is...

This resort may be much better off disassociating with Marriott/Vistana and going off on its own. It used to have a high rental value relative to MFs but that's no longer the case. And most trades via Staroptions or Abound are a trade down in terms of MF value or rental value. The value is now mostly in its use.

I suspect bad debt expense is only going to get worse after this year.

I don't understand what the plan is to right the ship. This can't continue. They need a way to get those nonperforming weeks back to paying fees again. How long does the foreclosure process take there? Perhaps they need some kind of deed back program, but then they would be flooded with weeks.

 

[DanCali]

I suspect bad debt expense is only going to get worse after this year.

I don't understand what the plan is to right the ship. This can't continue. They need a way to get those nonperforming weeks back to paying fees again. How long does the foreclosure process take there? Perhaps they need some kind of deed back program, but then they would be flooded with weeks.

They're still selling weeks there so getting back a week for free and selling it for $30K is profitable, especially if in the meantime they can rent it for cash.

But doesn't seem like's there a plan to get MFs under control. We were there after the 17% increase last year and went to a presentation where that was my #1 issue, which caused them to usher in the manager. I was "promised" by the sales manager that it was all inflation and that after that things will go back to the 2%-3% increases we've gotten used to. In the meantime, it was offered for us to surrender our ("dedicated") 2BR, which is actually the master of the 3BR lockoff and has the most "reasonable" MFs at the resort for what it is, and take a 3BR lockoff instead, which would have increased our MFs by 75%-80%. Given that I was already fired up about MFs, it was a non starter, so I don't remember the exact terms but we probably needed to add somewhere between $30K - $40K for that questionable privilege.

 

[tamu_bu]

I suspect bad debt expense is only going to get worse after this year.

No doubt.

 

[dioxide45]

They're still selling weeks there so getting back a week for free and selling it for $30K is profitable, especially if in the meantime they can rent it for cash.

But how much volume can they sell? When we went to a presentation it seemed like they only had a handful of sales reps on site. It wasn't a very big sales office. How many weeks would you estimate they sell in a month? I show that the resort has 198 units (though the attached indicates 228). If they sold 52 weeks each, then it puts them at 10,296 unit weeks. If the average MF is $3,750 and bad debts over $4million, it would seem they have more than 1,000 units weeks in default. If they took all those back and voluntarily took back from everyone else that wanted out, I would estimate they would end up sitting on 50% of the inventory at the property.

 

[DanCali]

But how much volume can they sell? When we went to a presentation it seemed like they only had a handful of sales reps on site. It wasn't a very big sales office. How many weeks would you estimate they sell in a month? I show that the resort has 198 units (though the attached indicates 228). If they sold 52 weeks each, then it puts them at 10,296 unit weeks. If the average MF is $3,750 and bad debts over $4million, it would seem they have more than 1,000 units weeks in default. If they took all those back and voluntarily took back from everyone else that wanted out, I would estimate they would end up sitting on 50% of the inventory at the property.

The 228 units listed are just Phase II, which are 4 buildings out of 7. Phase I is probably ~180 "units". I don't know how they count a unit because the lockoffs can be 1 or 2 units - maybe based on how they were sold?

In any case, I don't think the weeks are an easy sell for them no matter how they try to work the math and even if they say the bracelets are worth $150/person/day. The 2BR we own is the most cost effective unit but I doubt they have those in inventory (probably why they wanted ours) and the resort has no ROFR. I think most prospective buyers, no matter how uninformed, would simply balk at $3000+ MFs for a premium 1BR and $5400+ for a 2BR lockoff after you add in the club dues. Anyone who has the budget to pay that annually and also buy direct, is probably also affluent enough to just stay at Baha Mar or rent at the Cove or Reef at Atlantis in much more luxurious conditions.

If the average MF is $3,750 and bad debts over $4million, it would seem they have more than 1,000 units weeks in default.

That's not a good direction for a resort...

 

[Red elephant]

Of all the Vistana resorts, Harborside is the one I see as most likely to go into a death spiral and eventually fail/close. They have the most insane MFs and people have a hard 'time even giving away those deeds.

It’s not like MVC gave good abound point allocation. MF/point ratio also high. I have just been using my EOY small 1 bedroom.

 

[DanCali]

It’s not like MVC gave good abound point allocation. MF/point ratio also high. I have just been using my EOY small 1 bedroom.

MY/point and MF/SOs are were bad already and getting a worse wit this.

But I think the allocation itself is relatively ok for the Platinum weeks. It won't get you a 2BR in Hawaii, but that's a problem for all non-Hawaii MVC resorts. But 4525 Abound points for a 2BR lockoff and 3925 for a 2BR can get you to some nice places in Abound otherwise even in peak seasons. For comparison, a 2BR Platinum at the Marriott on St. Thomas is converts to just 3650 points.

(@dioxide45 I noticed that the 3925 number above is not in the election value spreadsheet - do you own that document?)

It's also not terrible on a relative basis for the Gold weeks but MVC undervalues summer in the Caribbean consistently (also at the MVC Caribbean resorts). And it's not like the 95,700 Staroptions for a 2BR lockoff Gold gets you a 2BR peak season in Vistana either at any of the Westins.

So I totally agree that the value is not in the use, especially if you want a larger unit. You won't get a 2BR with Staroptions outside of Fall hurricane season. But most people don't go every year, and renting is mostly a losing proposition.

 

[dioxide45]

(@dioxide45 I noticed that the 3925 number above is not in the election value spreadsheet - do you own that document?)

Is it the same for Phase I as it is for Phase II? The point value is showing for Phase II.

 

[DanCali]

Is it the same for Phase I as it is for Phase II? The point value is showing for Phase II.

You're right, I missed that!

Phase I doesn't have that type of 2BR unit (master of 3BR), so it doesn't apply there. I believe Phase I is just all 2BR lockoffs with small 1BRs and large 1BRs (no 3BR or "dedicated" 2BR)

 

[dioxide45]

You're right, I missed that!

Phase I doesn't have that type of 2BR unit (master of 3BR), so it doesn't apply there. I believe Phase I is just all 2BR lockoffs with small 1BRs and large 1BRs (no 3BR or "dedicated" 2BR)

Does Phase I have a 3BR at all? I've removed the 3BR and 2BR units from the spreadsheet for Phase I.

 

[DanCali]

Does Phase I have a 3BR at all? I've removed the 3BR and 2BR units from the spreadsheet for Phase I.

I don't think so.

 

[WBP]

Mark my words, watch for a surge on resale listings this December, at substantially below market value prices. This year’s maintenance fee increase will throw some number of owners over the edge, in my opinion.

 

[tomandrobin]

Wow.....I thought last year's MF increase was bad. These numbers are insane.

I wonder how many years will it take before the resort goes under? At the pace of the increases, it only going take a few more years.

 

[dioxide45]

Mark my words, watch for a surge on resale listings this December, at substantially below market value prices. This year’s maintenance fee increase will throw some number of owners over the edge, in my opinion.

I think market value is already at $0. There is someone trying to give away a week in the TUG Free Timeshares forum right now. A surge won't impact anything other than more listings. I think the only thing inventible is higher bad debt expenses for 2026 MFs when the bills roll out next year. I noticed that the resort also ran at a pretty significant deficit in 2024 and they are including that deficit recovery in the 2025 fees. So that is like a double whammy. They have to bill for the increases in operating expenses for 2025 as well as collect for the deficit that they ran at in 2024.

 

[heathpack]

What a shame for a resort I’ve always wanted to visit!

 

[dioxide45]

What a shame for a resort I’ve always wanted to visit!

The resort is still great and it is pretty easy now to book in with StarOptions.

 

[heathpack]

The resort is still great and it is pretty easy now to book in with StarOptions.

I don’t have Star Options.

However- a death spiral can’t be good. The resort may still be great, but how long will it be great as the death spiral spirals?

There’s some weeks sitting in open II inventory now, but I have a schedule conflict and can’t book then.

But—- what will next year look like when they have more defaults and run another big deficit? $1500/week “resort fee” a la Vidanta?

 

[DanCali]

The resort is still great and it is pretty easy now to book in with StarOptions.

It's always kind of depended on when and what you want to book.

With Staroptions it will still be impossible to get week 51 or 52, it will be extremely hard to book a spring break week (any unit), or to book a 2BR during the summer break. 1BR units during summer were always a possibility, but it is probably easier now than it was 10 years ago. Those with the flexibility to go in Sep-Oct (hurricane season after labor day) can do so in pretty short notice and may even find 2BRs.

Not sure if your experience is different than that?

 

[dioxide45]

It's always kind of depended on when and what you want to book.

With Staroptions it will still be impossible to get week 51 or 52, it will be extremely hard to book a spring break week (any unit), or to book a 2BR during the summer break. 1BR units during summer were always a possibility, but it is probably easier now than it was 10 years ago. Those with the flexibility to go in Sep-Oct (hurricane season after labor day) can do so in pretty short notice and may even find 2BRs.

Not sure if your experience is different than that?

As with any resort, holiday weeks will always be a hard reservation with StarOptions. That said, using a flexible +/- 3 days search, there are only a handful of weeks now through July that don't have any availability for 5 nights. I even see several 2BR and 3BR units for some of them. Even the week of Easter 2025 has availability.