Marriott Aruba Ocean Club Owners Being Ripped Off By Marriott - READ IF AN OWNER

[Dean]

One of the last communications I received from Marriott indicated the reason surf club maintenance fees were less than they are was because the developing is staying paying into them. Surf club owners are likely to be posting their own thread in the future, they should be interested in how this turns out.

I think we all know that new resorts tend to have developer subsidies and I believe it's been common knowledge that Surf Club had such a subsidy as did Ocean Club during sales if I recall correctly. I was under the impression that the subsidy at SC had either been reduced or eliminated but I do not know for certain. Both OC and SC have had lower dues than similar resorts in HI and St. Kitts and comparable dues to many US mainland locations and as such are probably too low at present ignoring the SA. Given the footprint and set up of the 2 resorts, I'd expect OC to be about $100 per unit more in maint fees over the long haul. It seems you're wishing bad luck on others to make your point, to me all the more reason for other owners to read and participate in this thread.

As I noted earlier in this thread, one must ask themselves whether holding Marriott's and the BOD's feet to the fire is the most important issue or doing what's best for the members. What are the potential end points, they are only a few and all but quitting are potentially costly to both sides. I don't see this ever had a chance of being successful without legal action and I think it was a mistake not getting in with a good lawyer from day 1. Had that been done appropriately, there likely would have been a very different outcome to date at a minimal cost. Going forward, I see the only action available other than through the courts. It may not get that far but I don't see any other way to proceed as you can only expect a settlement you'll be happy with if the other side thinks you have a reasonable chance of success legally. That will cost money, both to those pushing the issue and to the resort itself which ultimately means all of the members. In effect, you'll be paying for both sides of the fight. It might or might not pay off from a $$$ standpoint, even if successful in principle. And it's very possible that if pushed hard enough, Marriott will walk away from the resort. Can you imagine the threads on TUG then?

 

[dioxide45]

One of the last communications I received from Marriott indicated the reason surf club maintenance fees were less than they are was because the developing is staying paying into them. Surf club owners are likely to be posting their own thread in the future, they should be interested in how this turns out.

According to the historical MF information from the FAQ, the last year that the SC had a developer subsidy was in 2007. As it was mentioned long ago in this thread in response to one of my posts, the likely cause to lower fees at SC is that there are four times as many owners there than at OC. There are certain fixed costs regardless of the size of a resort. Spreading those costs out over more owners takes each individual owners MF down.

 

[lovearuba]

do you own there

According to the historical MF information from the FAQ, the last year that the SC had a developer subsidy was in 2007. As it was mentioned long ago in this thread in response to one of my posts, the likely cause to lower fees at SC is that there are four times as many owners there than at OC. There are certain fixed costs regardless of the size of a resort. Spreading those costs out over more owners takes each individual owners MF down.

If you own there I can send you the letter that references it

 

[SueDonJ]

See this is the problem. Im not the board police but I just like other posters get quite tired of someone telling them how they should think. I am entitled to my opinion which happens to be as I previously indicated. You can post as you like but still isnt going to change my opinion. Furthermore I wouldnt begin to speak for Mark who I happen to think has done a great job(with a few mssteps perhaps but has those under control now . But when you say things like, "lovearuba, I followed that up with a post here to Marksue asking him to clarify the "contingency arrangement" with the attorney(s), as well as how the new arrangement with an Aruban attorney differed from the ongoing arrangement with a US attorney, and have yet to receive a response" as though it is Mark's obligation to tell you what the owners are doing/have done/or are planning on doing I for one find it a tad offensive. Perhaps I read it wrong but it came across to me as a sense of entitlement. Nothing was posted here in the beginning for entertainment value. It was posted here to allow owners who had no knowledge of the efforts being made on their behalf to become aware. Any owner who wishes info is getting/can get that info very easily. In a general way the info will continue to be posted here by Mark and others Im sure . Personally as an owner, I think the specifics are better left to be dealt with in the manner that Mark and the many others who are organizing this are doing so at present.

See, I think this is the problem. Marksue brought these issues here to this discussion board, which I think logically means that the issues are open for discussion. As has been said, repeatedly, everybody who posts here is contributing to the discussion, and I don't think that anybody feels as though they are required to do so. Certainly I don't feel that way, but I do wonder why any of us would bother to join a discussion with the intent of not completing our thoughts. That's just poor communication skills.

It appears to me that Marksue, in particular, wants to use this discussion board as a place to rant and rave and be illogical with the hope of stirring the crowd to a frenzy against anything and everything Marriott. The trouble is, this format allows those of us who disagree with his opinions and/or actions to make our opinions known. It doesn't mean that we expect folks to fall in lockstep with us, it just means that we disagree. I can't speak for others, but the only entitlement I feel is that it's not wrong for me to post in this discussion. You disagree, that's your right, and you're entitled to say that fifty ways from Sunday whenever you choose. But you should be prepared for whatever responses your posts generate.

As far as this latest go-round that spurred another of your "non-AOC owners don't count" posts, maybe you're confused about the progression of the discussion? Lovearuba posted in response to JimC's "... one who is licensed to practice in Aruba ..." by copying a previous post of Marksue's which had been directed to me. So I reiterated that I still had unanswered questions about the Aruban attorney arrangement, as evidenced by my follow-up to Marksue's post. That's all - nothing in there about how anybody should immediately stop thinking their own thoughts and adopt mine, or any demand that Marksue immediately respond to me, or any sense of entitlement at all. I'm simply one voice of many in this discussion. As such, I will question and comment whenever I choose, and I will certainly respond to any posts which are specifically directed to me.

 

[SueDonJ]

One of the last communications I received from Marriott indicated the reason surf club maintenance fees were less than they are was because the developing is staying paying into them. Surf club owners are likely to be posting their own thread in the future, they should be interested in how this turns out.

According to the historical MF information from the FAQ, the last year that the SC had a developer subsidy was in 2007. As it was mentioned long ago in this thread in response to one of my posts, the likely cause to lower fees at SC is that there are four times as many owners there than at OC. There are certain fixed costs regardless of the size of a resort. Spreading those costs out over more owners takes each individual owners MF down.

If you own there I can send you the letter that references it

There's no need to be an owner at a specific resort to verify the financial information of that resort - anyone with a my-vacationclub.com account can view the info for all of the MVCI resorts. If you look under the "Owners" tab at the Aruba Surf Club page, you'll find the 2009 Operating Budget (with no mention of a developer subsidy) as well as the statement that explains this year's 17.5% maintenance fee hike.

 

[ecwinch]

It seems you're wishing bad luck on others to make your point, to me all the more reason for other owners to read and participate in this thread.

And in regard to the lawsuit, regardless of the outcome, the lawyers will get paid. It like that old joke where the lawyer goes in the bar and is all dejected.

2nd lawyer: "Why are you so down?"

1st lawyer: "I lost a case today"

2nd lawyer: "Did you get paid"

1st lawyer: "Yes"

2nd lawyer: "Then YOU didn't lose"

 

[m61376]

One of the last communications I received from Marriott indicated the reason surf club maintenance fees were less than they are was because the developing is staying paying into them. Surf club owners are likely to be posting their own thread in the future, they should be interested in how this turns out.

Since you quoted me above this post, I am assuming that this was intended because we own at the SC. Whether we own at the SC or any other Marriott, for reasons I stated before it affects all owners, because what happens here sets a precedent. I also fear that by backing the BOD and Marriott into a corner, so to speak, there likely will be repercussions at other resorts as Marriott may feel it is necessary to assume somewhat of a defensive posture in general.

That said, it is likely that the person that sent you that communication misspoke and was unaware that the developer subsidy has ended at the SC. As pointed out, there are 454 villas at the SC compared to how many at the OC (I think Dioxide may have been a little off by the four times, but the assumption is still correct)? Each resort has a single general manager and single heads of other departments. The SC now has 5 check-in days to better distribute housekeeping staff. They each have similarly manned pool and beach towel huts. They each have concierge desks, etc.. Likely there is a slew of other personnel which probably are either the same or only slightly more in number. Staffing cost for non maintenance and housekeeping personnel is likely considerably less per villa at the SC than at the OC and even though the SC requires more housekeeping and maintenance staff scheduling complete coverage is easier with more personnel and I'd venture to guess there are some cost savings there as well.

Additionally, even things like real estate lease costs and taxes would be less per villa because the SC is double the height. The units are newer and built to newer engineering specs (aside from the other issues at the OC) which would likely make its utility costs and maintenance issues less.

Although a lot of OC owners criticize the SC's size, the number of owners helps considerably to streamline costs. So, while I may be hiding my head in the sand like an ostrich, I don't think SC owners are likely to be posting a similar thread in the near future as you suggest. Nevertheless, as a Marriott owner, I am very interested in how this develops. How Marriott deals with OC owners reflects, to a certain degree, how they value owners in general and, on the flip side, how OC owners engage Marriott sets a tone for how Marriott will be forced to react if/when problems crop up at other resorts.

 

[Dean]

And in regard to the lawsuit, regardless of the outcome, the lawyers will get paid. It like that old joke where the lawyer goes in the bar and is all dejected.

2nd lawyer: "Why are you so down?"

1st lawyer: "I lost a case today"

2nd lawyer: "Did you get paid"

1st lawyer: "Yes"

2nd lawyer: "Then YOU didn't lose"

Exactly. IMO a well placed lawyer up front could have avoided where this is going now. Marriott offered to cover, what roughly half of the extra costs if I recall (please correct me as I'm going by memory and wasn't totally sure the amounts even when posted). A good lawyer involved up front could have likely gotten 70-80% of those total dollars (20-30% more) for a minimal investment. It likely would have come with a confidentiality agreement which I'm not sure could be assured though though I doubt Marriott would have gone after anyone that wasn't too blatant. A legal battle will likely end up about even to where the compromise was offered after costs are removed including legal expenses. However, that doesn't take into account the legal costs on the other side which will be footed mostly by the OC owners. I wonder if Marriott's agreement has a hold harmless clause that requires the resort cover their legal costs, win or lose, I'm betting it does. Even with a total win and Marriott covers all the costs "out of the goodness of their hearts", you can bet they'll get it all back over time just like an insurance company does plus there's still the legal fees and distrust. The more I think about this, the only way this can end where the group is happy is to separate from Marriott. I don't see any way to get back to a workable level of trust otherwise.

 

[ecwinch]

Exactly. IMO a well placed lawyer up front could have avoided where this is going now. Marriott offered to cover, what roughly half of the extra costs if I recall (please correct me as I'm going by memory and wasn't totally sure the amounts even when posted). A good lawyer involved up front could have likely gotten 70-80% of those total dollars (20-30% more) for a minimal investment.

Various numbers have been reported 43, 47, and 48%.

And as much as I would like to think you are correct, it would not have mattered here. You had a dissident BoD member who had an agenda. As soon as he was removed as BoD President, the fecal matter hit the oscillating air cooler.

Compare the following:

Jan 14, 2008 - BoD adopts resolution to give MVCI time to respond, or they will file legal action

Date BoD decided to not pursue lawsuit: ? I think this was summer

Date Allan was removed from BoD Presidency: ? At the annual meeting ? Sept

Oct 1, 2008 - Date the crusade started

From Mark's second post -

"I actually spoke with Alan and he is the one that suggested getting people togehter and trying to find an attorney to start a class action."


For Mark's third post in this thread:

"That is exactly right. MVCI should be paying for the roof and structural repairs and not pass those costs on to the owners. If they were to lose the suit they would not be able to pass those costs on to the owners."

For his post 11/1/2009:

"Just so you are aware Allan has nothing to do with the the proposition for a class action suit, he never suggested it and as a board memeber would not be one to initiate the suit"

 

[ecwinch]

Here is some transparency for you....

This is part of Dirk Schavemaker letter to Ocean Club members.

As referenced in information previously sent to you in the 2009 Annual Maintenance Fee statement as well as the Board's annual letter, Marriott Vacation Club International retained independent consultants to conduct a thorough review of building conditions and to make recommendations regarding building maintenance. Marriott Vacation Club International’s leadership has been in contact with the Aruba Ocean Club Board of Directors throughout this process, and the independent consultants engaged by Marriott Vacation Club International have also provided reports of their findings to the Board. We anticipate that the Board will make these reports available to all Aruba Ocean Club Owners through the Association website: www.arubaoceanclub.com no later than the first week of June.

Furthermore, Marriott Vacation Club International recently provided a letter to the Aruba Ocean Club Board of Directors summarizing the current status of all current building matters, and a copy of this letter will also be posted on the Association website. We encourage Owners with questions regarding the information posted on the website to contact the Board of Directors or Corey Guest, the resort General Manager.

And the respective reports are on the web site also as promised. Here is the statement on the roof:

Although AOC realized approximately 10 years of useful life from the original roof, MYCI paid
for a prorated 5/14ths of the roof replacement cost to account for the approximately 5-year period the concrete skeleton and roof of the current AOC building were idle prior to full development of the resort.

And corrosion:

Further, HA Associates confirmed that the mansard roof metal frames do not have significant corrosion affecting the capacities of the structure.

And windows:

While the window manufacturer provided the replacement windows under their warranty,
the manufacturer did not pay for the international shipping, duties, taxes and installation of these windows. MYCI offered to pay these costs at no charge to the Cooperative Association.

In 2009, MYCI, as a gesture of goodwill, ordered 500 additional windows for the Cooperative
Association as attic stock and had them delivered to the site.

 

[Eric]

More speculation without facts. Marriott pays fees for UNSOLD units. They don't supplement sold units.

One of the last communications I received from Marriott indicated the reason surf club maintenance fees were less than they are was because the developing is staying paying into them. Surf club owners are likely to be posting their own thread in the future, they should be interested in how this turns out.

 

[ecwinch]

More speculation without facts. Marriott pays fees for UNSOLD units. They don't supplement sold units.

That is correct. I think LoveAruba was referring to developer subsidies to the resort for common areas

 

[Eric]

yes and its in proportion to unsold units, not sold units

That is correct. I think LoveAruba was referring to developer subsidies to the resort for common areas

 

[dioxide45]

(I think Dioxide may have been a little off by the four times, but the assumption is still correct)? .

454 at SC
125 at OC
Approximatly 3.6 more at the SC than OC. I was close.

 

[ecwinch]

I think that merits a deduction of 500 posts from your total.

Close is not good enough in math, and only counts in hand grenades.

 

[Dean]

And as much as I would like to think you are correct, it would not have mattered here. You had a dissident BoD member who had an agenda. As soon as he was removed as BoD President, the fecal matter hit the oscillating air cooler.

You never know what would have happened of course. And there were two issues, one could argue whether one helped or hurt the other, likely a little of both. These were the SA and development issues, the other the intricacies within the BOD and between the BOD and the owners there. I'm still of the opinion had the group had good and appropriate legal representation before any real confrontations started, the outcome could have been much better, in that sense the BOD conflict was likely a major negative. The fact that Marriott was willing to cover roughly half suggests they would have been amenable to a well placed proposal, likely with an in between compromise if handled well. One could also argue it is an admission of guilt I suppose which should be one of the main points if this does go forward. A few hundred dollars likely could have gotten Marriott up to roughly 70% in all likelihood, the best overall outcome for the owners there. Given the age of the roof this would have been essentially full price for the roof itself taking into account the life of a roof and how long it had been in place. This would not have accounted for other damage that might have been caused that is beyond the SA and normal maint. The other issue which was alluded to earlier is that any member of the BOD who were to participate in a lawsuit as a whistle blower better dang sure hope for a total victory in said lawsuit or a total cave by the resort and BOD else they're almost certainly looking at a civil action by MVCI and the resort. Even if this is the end of it other than some unhappy folks, I don't think said ex BOD member is totally out of the woods. I'm not saying this to bash anyone and it's certainly not a suggestion on my part that it should happen, I'm merely pointing out the obvious. I doubt the directors insurance would apply in this situation.

 

[lovearuba]

More speculation without facts. Marriott pays fees for UNSOLD units. They don't supplement sold units.

"We definitely have the same thoughts as you do with the rising costs. 2009 maintenance fees were driven by several increases beyond anyone’s control, including in utility costs, water expenses and inflation in Aruba. The additional repair cost of hurricane Omar was also unanticipated. We have also been faced with a good bit of deferred maintenance from prior spending decisions. We are aware that Marriott’s Aruba Surf Club’s fees increased substantially year-over-year; maintenance fees at that property may still be lower due to the size of the resort and costs can be spread greater; also, the property is not fully sold out and units are therefore still subsidized by Marriott."

Eric, I'm not sure what your point is on my statement but maybe you can read the precise wording (above) that you think I misinterpreted and let me know how I did that. To me its pretty clear that units are subsidized by Marriott.

 

[Eric]

The point is you don't understand what the subsidizing means. Basically Marriott pays the fees for unsold units, thats it. There is no evidence to prove that once they stop doing this, fees will go up. Dave has posted many times to verify this information.

"We definitely have the same thoughts as you do with the rising costs. 2009 maintenance fees were driven by several increases beyond anyone’s control, including in utility costs, water expenses and inflation in Aruba. The additional repair cost of hurricane Omar was also unanticipated. We have also been faced with a good bit of deferred maintenance from prior spending decisions. We are aware that Marriott’s Aruba Surf Club’s fees increased substantially year-over-year; maintenance fees at that property may still be lower due to the size of the resort and costs can be spread greater; also, the property is not fully sold out and units are therefore still subsidized by Marriott."

Eric, I'm not sure what your point is on my statement but maybe you can read the precise wording (above) that you think I misinterpreted and let me know how I did that. To me its pretty clear that units are subsidized by Marriott.

 

[dioxide45]

I think that merits a deduction of 500 posts from your total.

Close is not good enough in math, and only counts in hand grenades.

I did indicate 4 times as many owners. Since we don't know how many multiple week owners there are at each individual resort it truely could be closer to 4x. Now my last example provided specific ownership weeks but my original post indicated actual owners

 

[dioxide45]

The point is you don't understand what the subsidizing means. Basically Marriott pays the fees for unsold units, thats it. There is no evidence to prove that once they stop doing this, fees will go up. Dave has posted many times to verify this information.

So it works like this?

Owners pay the MF up front for all units, sold and unsold? At the end of the year Marriott then pays the MF for those unsold units and that gets paid back to the owners through the HOA and it becomes the developer subsidy people see in their MF bill? When the resort sells out owners don't see that subsidy in their MF?

I need to understand this more because there are almost always some unsold units but the developer subsidy are not always there, and the developer subsidy usually goes away before the unit is completly sold out.

 

[Eric]

People always think the developer is paying the subsidy to artifically lower the owners fees which is not the case. It in place to pay for unsold units which are the developers responsibility.

So it works like this?

Owners pay the MF up front for all units, sold and unsold? At the end of the year Marriott then pays the MF for those unsold units and that gets paid back to the owners through the HOA and it becomes the developer subsidy people see in their MF bill? When the resort sells out owners don't see that subsidy in their MF?

I need to understand this more because there are almost always some unsold units but the developer subsidy are not always there, and the developer subsidy usually goes away before the unit is completly sold out.

 

[Dave M]

For subsidies, here's how it works. And, no, Eric, Marriott doesn't always pay MFs for unsold weeks. It doesn't need to.

During the early years of resort sales, Marriott contributes cash to the HOA as a subsidy. If it didn't, the owners would have an extremely high MF in those early years. As a ridiculous example, assume that Marriott sells only 100 weeks in the first year and the HOA expenditure budget for that year is $1,000,000. Without a subsidy, the MF for that year would be $10,000 for each owner!

As Marriott makes more sales, the subsidy is gradually phased out. Even though not all weeks have been sold, the HOA becomes self-sustaining without a Marriott subsidy. As still more weeks are sold, expenses (housekeeping, repairs, utilities, etc.) increase and the higher expenses are paid for by the MFs on the additional weeks sold.

Marriott's subsidy for Surf Club ended in 2008. You can log in to MVCI and look at the financial budget on the Surf Club owner's site and see that all revenues now come from MFs. Compare that to (for example) the budget for St. Kitts, which as a newer resort, still has a line item for "Developer Subsidy (credit) in the 2009 budget.

 

[m61376]

I did indicate 4 times as many owners. Since we don't know how many multiple week owners there are at each individual resort it truely could be closer to 4x. Now my last example provided specific ownership weeks but my original post indicated actual owners

good save.

I apologize- I actually thought there were more than 125 villas at the OC (wouldn't be the first or last time I was wrong though ).

It doesn't matter how many multiple week owners though, since each owned week incurs the same MF regardless of how many weeks owned.

 

[SueDonJ]

I did indicate 4 times as many owners. Since we don't know how many multiple week owners there are at each individual resort it truely could be closer to 4x. Now my last example provided specific ownership weeks but my original post indicated actual owners

As a ridiculous example, assume that Marriott sells only 100 weeks in the first year and the HOA expenditure budget for that year is $1,000,000. Without a subsidy, the MF for that year would be $10,000 for each owner!

Oh great - a surprise math quiz this morning. I hate when that happens.

 

[SueDonJ]

... We are aware that Marriott’s Aruba Surf Club’s fees increased substantially year-over-year ...

Using the figures for 2BR l/o units, a quick look at the Maintenance Fee FAQ proves that what's said above about the Surf Club's fees (and the implication for Ocean Club's) is true. For the years 2005 - 2008, fees increased $247.50, an average of $82.53 per year, not counting the $306.51 developer subsidies. Add those in and that's a total over three years of $554.01 with an average of $184.67 per year.

Contrast that with Ocean Club's history for the years 2001 - 2008, when fees increased in total over seven years $399.59, only an average of $57.08 per year with no developer subsidies.

Considering that there are fewer owners at Ocean Club than Surf Club it's really not surprising at all that the Ocean Club's fees would at some point need to be increased substantially to cover the years of insufficient collections. It's just too bad that it had to happen this year, when it's also time for villa refurbishment and property restoration.

Now I know somebody (hello, Dave) will correct the figures if I'm wrong here, but if I'm not then I want Extra Credit points.