MVC Food & Beverage Revenue and Management Fees

[Superchief]

With all of the recent significant increases in MF's for all of our resorts, I would like to better understand what are MVC's responsibilities vs. the resort owners.
Food and Beverage Service
I understand that MVC generates income from food and beverages at MVC resorts. How are the expenses for these services allocated? For example, I just recently returned from a great stay at Crystal Shores. Stilts was very busy the week I was there. The restaurant, bar, and poolside service generated significant sales during that time. Does MVC pay for the facility rental, bar and restaurant staff at Stilts, and for the HR and management expenses that are required for the restaurant/bar?

Management Fees
MVC collects a 10% management fee for the operating costs and reserve requirements for every resort. What do they provide to the resorts for this 'management' fee? I previously thought this basically covered the corporate costs including owner services and other corporate expenses. However, I've noticed that many of these expenses are listed separately on our MF's.

I've been unable to find any of this information, but think all of us need to become more aware of what is driving our excessive MF increases, and what can we do about it.

 

[dioxide45]

Any and all resort operations are covered by the owners through the annual maintenance fees. So the general manager and all the employees are paid out through MFs. Resort food and beverage is different. Those employees are paid for by MVCI and it is the sale of food and beverage that covers their pay and any costs incurred from the sale of food and beverage. Our Harbour Lake budget has an income line item of "Association Fees - Commercial Units". I am not exactly sure what this is. It is only a couple thousand dollars. So it may only be to cover utilities for those commercial units utilized by MVCI for food and beverage. Or perhaps it is something else. From what I understand, MVCI pays no rent to utilize the space where they operate food and beverage operations.

From what I understand the 10% management fee is pure profit on top of any and all resort expenses. This goes in with all other profit to cover higher level executive pay and bonuses that aren't paid for at the resort level along with any other costs at the corporate level. Like that fancy new office building they have in Orlando. I do also believe 100% of the website IT is paid for through the "Owner Services" line item of our budgets.

 

[bazzap]

The MVC management fee varies by region, it is 15% in Europe and Asia.
The latest MVW annual report just touches on some of the points in question.

 

[bazzap]

Food and Beverage Service Income and expenses also varies across the MVC portfolio.
Several of our “home” resorts are colocated with Marriott International (MI) hotels.
At some, MI operate all F&B and our MFs just contribute an agreed amount to access and maintain the shared asset.
At others, MVC and MI operate separate F&B, so this has a different financial model.

 

[daviator]

Food and Beverage Service Income and expenses also varies across the MVC portfolio.
Several of our “home” resorts are colocated with Marriott International (MI) hotels.
At some, MI operate all F&B and our MFs just contribute an agreed amount to access and maintain the shared asset.
At others, MVC and MI operate separate F&B, so this has a different financial model.

YES - and it’s worth mentioning that because MVC gets paid for management of the resorts regardless of anything else, they will not operate a food/beverage facility unless it is profitable and it’s worth their while to do so.

in other words, while a resort hotel might operate a restaurant as a sort of loss leader – perhaps it loses a little money, but is deemed important to have as part of the resort offerings – MVC doesn’t really care whether the resort has a restaurant or not. They have a captive audience of owners who will come regardless, and they won’t continue to operate a restaurant that’s not adding to their profits, That's past of the reason some properties lost restaurants during Covid and they came back with lesser (simpler, cheaper to operate) offerings than previously existed.

 

[timsi]

Resort food and beverage is different. Those employees are paid for by MVCI and it is the sale of food and beverage that covers their pay and any costs incurred from the sale of food and beverage.

Can you provide the source for this information? Is it recent, accurate and consistent across all the Vistana and Marriott resorts?

Our Harbour Lake budget has an income line item of "Association Fees - Commercial Units". I am not exactly sure what this is. It is only a couple thousand dollars. So it may only be to cover utilities for those commercial units utilized by MVCI for food and beverage. Or perhaps it is something else. From what I understand, MVCI pays no rent to utilize the space where they operate food and beverage operations.

Is there a reason why Marriott should not pay fair rental value to our resorts?

 

[timsi]

YES - and it’s worth mentioning that because MVC gets paid for management of the resorts regardless of anything else, they will not operate a food/beverage facility unless it is profitable and it’s worth their while to do so.

in other words, while a resort hotel might operate a restaurant as a sort of loss leader – perhaps it loses a little money, but is deemed important to have as part of the resort offerings – MVC doesn’t really care whether the resort has a restaurant or not. They have a captive audience of owners who will come regardless, and they won’t continue to operate a restaurant that’s not adding to their profits, That's past of the reason some properties lost restaurants during Covid and they came back with lesser (simpler, cheaper to operate) offerings than previously existed.

I believe that hotel restaurants in prime locations can be highly profitable. While resort food is often overpriced and of average quality, we are a captive audience and frequently dine on the premises for convenience. I don't see why the developer shouldn't be able to pay full rent to the HOA and still maintain profitability.

 

[timsi]

Talking about the MVC Food & Beverage, I'm curious about whether the credit card fees we pay in the budget also cover food and beverages consumed at the resorts. There could be another way for us to cover the costs while the developer makes a profit.