maintainance fees

[zinupe]

could someone please clarify the deal on MF. i've hear 10% per year at St John's. I spoke to the sales manager at Orlando today who said the MF was capped at 5%. What have the MF been like at WKORV the last several years or WMH. i own WPORV and cancun so i'm very curious about what to expect. they can't jack up the price too much, otherwise everyone will start selling their units. certainly not good for the company.

any insight?

 

[DavidnRobin]

could someone please clarify the deal on MF. i've hear 10% per year at St John's. I spoke to the sales manager at Orlando today who said the MF was capped at 5%. What have the MF been like at WKORV the last several years or WMH. i own WPORV and cancun so i'm very curious about what to expect. they can't jack up the price too much, otherwise everyone will start selling their units. certainly not good for the company.

any insight?

Did you mean Orlando resorts - or SVO sales in Orlando?

First - Sales Manager???!!! I hear they always tell the truth...

Also - be careful about MFs and special assessments - WSJ MFs did not increase much, but there was a special assessment (or whatever they called it)

 

[johnmfaeth]

Keep in mind that MF's are not a "see what we can gouge them" situation for management companies. They do earn a certain fixed percentage of the budget as there management fee. Typically in the 12% range. Most of the budget and be definition, the increases are mandated by other realities.

In the Caribbean for example, 100% of energy is produced by oil-fired electricity generation. As a result, energy costs have tripled in the last 3-4 years as oil went from $30 to $90-$100 per barrel.

In the last three years (remember Katrina and Florida), hurricane insurance pretty much doubled.

MF increases have reflected these cost increases. This year, increases are less. But do you want to stay at a resort which cuts out pool and room cleaning to cover these uncontrollable increases? Probably not....

I don't like increases any more than the next person. But viewing them as them vs. us is far from realistic and helps no one. This comment is not directed at or an attack on the original poster, but a statement that the money has to come from somewhere and such decisions can be very tough.

But caps in general are a terrible idea. They further artificially constrain the ability of the Board of Directors to manager with all the options on the table.

Not doing essential repairs and maintenance will destroy a resorts ratings, reviews, and resale value far quicker than a MF increase of needed special assessment IMHO.

 

[DeniseM]

We expect 10% a year in Hawaii.

And I don't think Starwood cares if you sell your unit, but they do care if you buy a resale instead of buying from them!

I don't know about all the resorts, but at the WKORV, the majority of the board members are Starwood employees so I don't believe they actually represent the owners. So at least at WKORV, it is "Us vs. Them."

 

[DavidnRobin]

JohnF - Yes, it is important that these costs be managed appropriately, but I have gone thru the WSJ Budget - the MFs (including these things) only went up ~1%. The replacement reserves is what caused the 15% increase (but if this goes back into the units - I am for it). Also, looking at SVO MFs overall - they have increased ~10% per year for 3 years. The Cost-of-Living has not gone up at this rate year over year (not even in the Caribbean).

 

[zinupe]

thanks for the insight. i agree that there shouldn't be a cap on MF, but when is the price going to be cost prohibitive. IF MF continue to increase at this rate, we'll be looking at $3000 a week to stay at our resorts such as princeville. Can the rate increases continue to occur at its current rates. I believe it is a bit ridiculous and alarming. Should these rates continue, noone will buy these properties. Heck, we're already looking at greater than $250 a nt for princeville after the 50k that many of us have put in. I'm just wondering if Starwood realizes this in their business plan.

I agree with the other TUGGers, starwood cannot allow MF to continue to rise like this year in and year out without some sort of backlash.

 

[johnmfaeth]

I agree that high-end timeshares bought from the developer are not cheap. They often take 10-15 years or longer to generate a positive return on investment, if at all. But luxury isn't cheap and folks seem very willing to pay a premium often 5-10 times larger than the cost of a decent mid-range property such as a Wyndham.

But purchased resale, the cost per night drops way below hotel rates for the same location. A resale one bedroom ($12K) at the WSJ will pay itself off in savings (vs. hotel rates) in 4-5 years, even with the current fees continuing to increase at 10% per year. A resale Wyndham will often pay for itself the first stay.

I am no Hawaii expert, what is the normal "street cost" per week of booking an equivalent unit there or at a similar property with taxes, fees, etc. (all-in cost)? It is problably more than 3K per week right now is my guess for a 2 BR.

My intent is not to be argumentive, please take no offense. But apples to apples, it is still the cheaper way to go in most cases. I have personally dropped $400 per night+ on two occasions in the 90's for a hotel room at the Westin St. John (1st time it was still the Hyatt). With my resale studio, the cost per week dropped to $900. Sold it a year ago and got my money back.

 

[LisaRex]

I am no Hawaii expert, what is the normal "street cost" per week of booking an equivalent unit there or at a similar property with taxes, fees, etc. (all-in cost)? It is problably more than 3K per week right now is my guess for a 2 BR.

I'd put the Westin villas in between Kaanapali Shores and Kaanapali Alii. The former doesn't have as nice units uniformly but is on the same beach. The latter is well regarded and tend to have granite countertops, flat screen tv's etc., though the units are larger and are on the south end of Black Rock, which a lot consider the most desirable part of the island.

Despite what Starwood says, there are, indeed, seasons on Maui. So it's hard to really compare apples to apples because the price varies depending on the season. But generally speaking, a 2 bdrm/2 bath ocean front premiere unit at KA goes for $600-$975/night. The same unit at KS are listed at $300-500/night. That, IMO, would mean that a reasonable OF price at WKORV would be around $750/night since I'm traveling during high season.

My MFs are $1700 this year, meaning I "saved" $3900 this year. At that rate, not considering interest or the time value of money, it would take me over 13 years to break even.