MF Impact of Reduced Occupancy/Closure?

[TXTortoise]

This got lost in another thread, but I would be interested in thoughts on how the reduced occupancy, or possible temporary closure, at a resort might increase or decrease maintenance fees.

While hotels are at a reported occupancy level of 10%, timeshares have steady income in the form of MFs.

What I don't have is a good understanding of how much of that helps keep staff employed and maintenance ongoing vs the ancillary guest services and related revenue that may be shut down. I've read that most of the onsite services are profit generators for MVC, so one might think the MFs would help keep the current staff employed even if not in their normal job.

Along the same line, MFs guarantee a minimum level of income, that hotels don’t have, and would allow a larger portion of the staff to remain active, even if not in their normal job.

As I write this, I guess one could look at the MF budget line items and see how each might be impact.

I really could do without another 7% increase at Maui OC.

 

[StevenTing]

I think part of it depends on if workers are salary or hourly. I have to believe a majority of staff are hourly, particularly the cleaning staff. However, maintenance is probably salary and now would be a great time to start working on projects with minimal guest interruption. I wouldn't necessarily expect a decrease in MF but maybe a steady rate the next year.

 

[Steve Fatula]

As I look through one resorts budget, I see some things that should go down, electric, water use, food and activities for example. But things like Bad Debt could well go up. Things like cable tv are likely always going up, whether anyone watches them or not. Housekeeping could go down I suppose and is a major expense. I'd be worried about collections and bad debt though, for me, hard to call.

 

[n777lt]

I think part of it depends on if workers are salary or hourly. I have to believe a majority of staff are hourly, particularly the cleaning staff. However, maintenance is probably salary and now would be a great time to start working on projects with minimal guest interruption. I wouldn't necessarily expect a decrease in MF but maybe a steady rate the next year.

Maintenance and "engineers" if not supervisors are most likely hourly employees, per Federal law. If they are not direct Marriott employees, i.e., employed by a third party, what Marriott gets charged for their labor may be a flat fee, but my impression is that at least in the US the staff we see are in fact Marriot employees.

 

[TravelTime]

I think maintenance fees are the least of our problems right now. With everyone losing money, we can only hope MFs stay the same next year.

 

[Norcal5]

I think they will increase considerably due to collections and bad debt. The last bill to be paid is a timeshare maintenance fee, and the remaining owners will need to cover the non-payers.

 

[Big Matt]

I think part of it depends on if workers are salary or hourly. I have to believe a majority of staff are hourly, particularly the cleaning staff. However, maintenance is probably salary and now would be a great time to start working on projects with minimal guest interruption. I wouldn't necessarily expect a decrease in MF but maybe a steady rate the next year.

Marriott generally uses outsourced companies for cleaning/maid service.

 

[Big Matt]

Each BOD can decide what to do with the budget. My guess is that they try to keep the MFs low, but other nice to have things may suffer. I just hope the places I own don't dip into the reserve fund or we are looking at special assessments later. No free lunch.

 

[ski_sierra]

I'd be really curious to see what happens. My hypothesis is Marriott does not have the incentive to reduce or manage MF as higher MFs lead to higher management fees. It takes work to reduce costs and I'm not sure they will spend the energy to do that. We will get the facts in a couple of years.

 

[Dean]

This got lost in another thread, but I would be interested in thoughts on how the reduced occupancy, or possible temporary closure, at a resort might increase or decrease maintenance fees.

While hotels are at a reported occupancy level of 10%, timeshares have steady income in the form of MFs.

What I don't have is a good understanding of how much of that helps keep staff employed and maintenance ongoing vs the ancillary guest services and related revenue that may be shut down. I've read that most of the onsite services are profit generators for MVC, so one might think the MFs would help keep the current staff employed even if not in their normal job.

Along the same line, MFs guarantee a minimum level of income, that hotels don’t have, and would allow a larger portion of the staff to remain active, even if not in their normal job.

As I write this, I guess one could look at the MF budget line items and see how each might be impact.

I really could do without another 7% increase at Maui OC.

I doubt it'll have a big impact unless there's a rash of defaults. Just like in 08/09 fees kept going up even though everything else went down. Of course the added cleaning and security procedures could increase staffing costs.

 

[hcarman]

After the hurricanes our property went up to cover additional expenses. But they continued with a refurb later that year. Seems like under extenuating circumstances when people are hurting financially they should push those refurbs an extra year. Marriott is on top of that stuff and a year shouldn’t hurt. In the long run it might save on bad debt/defaults if they stabilize fees during these years at the expense of waiting an extra year for a project.

 

[Steve Fatula]

After the hurricanes our property went up to cover additional expenses. But they continued with a refurb later that year. Seems like under extenuating circumstances when people are hurting financially they should push those refurbs an extra year. Marriott is on top of that stuff and a year shouldn’t hurt. In the long run it might save on bad debt/defaults if they stabilize fees during these years at the expense of waiting an extra year for a project.

You can provide that feedback to your owners association for your resort or the management association for the resort. I think it's not a bad idea at all. You should be able to find that info on mvci.com for your resort.

 

[Saintsfanfl]

You can provide that feedback to your owners association for your resort or the management association for the resort. I think it's not a bad idea at all. You should be able to find that info on mvci.com for your resort.

+1. It isn't up to Marriott. They have "brand" guidelines but it is ultimately up to the HOA and there may not be anything quick enough to make a decision that counters what was already decided and voted on.