Ocean Pointe’s proposed budget increase is 10-15%

[dougp26364]

can someone tell me what ocean point mf fees are for 2020 ? in another thread they are stating 10-15% increase from 2019 ?

[Post moved from MF's sticky thread. OP owners, have your MF's been finalized yet? <-- SueDonJ]

last year a 3 bedroom silver season was $2,000. So this year it would be between $2,200 and $2,300.

 

[jimf41]

This is a proposed budget. The board meets on November 13th to finalize the budget. There used to be a caveat on this thread that we don't post anything but final approved MFs. Is that no longer in effect?

 

[Steve Fatula]

This is a proposed budget. The board meets on November 13th to finalize the budget. There used to be a caveat on this thread that we don't post anything but final approved MFs. Is that no longer in effect?

I don't see anything posted in the 2020 MF sticky thread for Ocean Pointe? So, I don't see where it was violated?

 

[dougp26364]

This is a proposed budget. The board meets on November 13th to finalize the budget. There used to be a caveat on this thread that we don't post anything but final approved MFs. Is that no longer in effect?

Even the title states this is a proposed budget and it’s a separate thread from the MF’s for 2020. I posted it because, IMHO, Ocean Pointes MF’s have been out of control for years as the board has added amenity after amenity, which all have to be maintained on top of being in a high risk hurricane zone. Ocean Pointe’s MF increases are ALWAYS among the highest in the MVC world.

Maybe in the end it won’t be 10-15%. Maybe it will be along the lines of their typical 5%, or maybe they’ll fail to waive the fully funded reserves and it will be 47%.

 

[jimf41]

I don't see anything posted in the 2020 MF sticky thread for Ocean Pointe? So, I don't see where it was violated?

Sorry, got my threads mixed up. Still, I don't think it's necessary to get all fired up over a proposed budget.

 

[SueDonJ]

Sorry, got my threads mixed up. Still, I don't think it's necessary to get all fired up over a proposed budget.

You may have first seen hogs14's post asking about the proposed OP budget in the sticky thread, before I moved it from there to here because it wasn't the approved/billed MF's.

Every year there are at least few TUGgers surprised by the proposed budgets, usually having to do with Florida or South Carolina resorts because of the fully-funded reserves issues but occasionally for other issues that don't seem to be in line with norms. Unfortunately it seems this year Ocean Pointe may be dealing with both types of increases?

 

[dougp26364]

Sorry, got my threads mixed up. Still, I don't think it's necessary to get all fired up over a proposed budget.

If it was the usual 4-5%, I probably wouldn’t have batted an eye. But to say the “proposed” increase is 10-15%? WTH is management doing at this resort? Poor financial management by our former resort manager? Hidden building damage not revealed to the owners? Poorly funded cash reserves for future needs? Higher than anticipated payroll costs? More frequent replacement of furnishings due to higher than anticipated wear and tear?

A proposed 5% increase at an MVC Resort doesn’t surprise me. If this is a one off adjustment, give the reason. If this becomes the new norm fees will double in 6 years, which is alarming to me. Whatever the reason a proposed increase of this magnitude NEEDS to be explained.

 

[davidvel]

What do you expect the manager to do when the manager and its minions are in charge of the budget, and the manager makes 10% of the budget? And the manager is a for-profit company?

The budget ain't going down.

 

[rickandcindy23]

Custom House Boston was increasing ridiculously every year. We sold it, finally, after feeling robbed.

I was able to get a trade with a Willow Ridge studio into Custom House for next year, but we decided on Europe, so I had to turn it down. I was so disappointed to not be able to use a truly great exchange like that. I am entering another one for the next year, a wide range of dates for mid-late spring. We want to go to another baseball game for sure.

 

[TheTimeTraveler]

If it was the usual 4-5%, I probably wouldn’t have batted an eye. But to say the “proposed” increase is 10-15%? WTH is management doing at this resort? Poor financial management by our former resort manager? Hidden building damage not revealed to the owners? Poorly funded cash reserves for future needs? Higher than anticipated payroll costs? More frequent replacement of furnishings due to higher than anticipated wear and tear?

A proposed 5% increase at an MVC Resort doesn’t surprise me. If this is a one off adjustment, give the reason. If this becomes the new norm fees will double in 6 years, which is alarming to me. Whatever the reason a proposed increase of this magnitude NEEDS to be explained.

I wonder what will happen when the economy has some inflation?





.

 

[Steve Fatula]

What do you expect the manager to do when the manager and its minions are in charge of the budget, and the manager makes 10% of the budget? And the manager is a for-profit company?

The budget ain't going down.

Isn't the "manager" the manager of all MVCI resorts, none of which have such an increase thus far other than this one resort (potential)? Shouldn't all the others rise as well by a massive amount using that reasoning? Not sure I follow the logic. Or maybe you are just saying up in general, not this specific resort?

It will be interesting to hear the whys of it.

 

[dougp26364]

Isn't the "manager" the manager of all MVCI resorts, none of which have such an increase thus far other than this one resort (potential)? Shouldn't all the others rise as well by a massive amount using that reasoning? Not sure I follow the logic. Or maybe you are just saying up in general, not this specific resort?

It will be interesting to hear the whys of it.

Each resort has its own on site manager, who helps set the budget along with each individual resorts elected BOD.

 

[SueDonJ]

Each resort has its own on site manager, who helps set the budget along with each individual resorts elected BOD.

Yes, as far as the actual operating costs of the resorts, but over and above those MVW corporate has extensive budget influence because for the most part they dictate the brand standard and maintenance/refurbishment schedules.

But in talking about the 10% Management Fee and the supposition that MF's are raised artificially in order to inflate it, I agree with Steve that it's a baseless accusation until/unless we see the same unexpectedly-high increases across the network of resorts. (That's not what's happening this year - OP's 10-15% is a true outlier.) Consider, the onsite General Manager is a hired position with a salary paid by MVW. The 10% Management Fee has nothing to do with the GM; it's collected by MVW (as stipulated in the Management Agreement governing doc) and is basically just a guaranteed profit margin. (Which at a 3-5% yearly increase in my annual MF's I don't begrudge the company, but it's certainly understandable that many do.)

My two resorts don't issue proposed budgets but included with the annual invoice is an explanation of any outlier increases/decreases and basic info about the state of the resorts. I take it that the resorts that do issue proposed MF's, don't explain outliers until after the approved budget is invoiced? This thread has me very curious to see the explanation for OP this year.

 

[davidvel]

Yes, as far as the actual operating costs of the resorts, but over and above those MVW corporate has extensive budget influence because for the most part they dictate the brand standard and maintenance/refurbishment schedules.

But in talking about the 10% Management Fee and the supposition that MF's are raised artificially in order to inflate it, I agree with Steve that it's a baseless accusation until/unless we see the same unexpectedly-high increases across the network of resorts. (That's not what's happening this year - OP's 10-15% is a true outlier.) Consider, the onsite General Manager is a hired position with a salary paid by MVW. The 10% Management Fee has nothing to do with the GM; it's collected by MVW (as stipulated in the Management Agreement governing doc) and is basically just a guaranteed profit margin. (Which at a 3-5% yearly increase in my annual MF's I don't begrudge the company, but it's certainly understandable that many do.)

My two resorts don't issue proposed budgets but included with the annual invoice is an explanation of any outlier increases/decreases and basic info about the state of the resorts. I take it that the resorts that do issue proposed MF's, don't explain outliers until after the approved budget is invoiced? This thread has me very curious to see the explanation for OP this year.

My post was not really an accusation, more of conjecture. I was pointing out that in this self-dealing structure, there a little to no incentives to "keep costs down." And, I find it unconscionable that "management" gets 10% for monies that are collected to go into reserves. This is simply a transfer of money to a bank account, no coordination or other action needed.

 

[SueDonJ]

My post was not really an accusation, more of conjecture. I was pointing out that in this self-dealing structure, there a little to no incentives to "keep costs down." And, I find it unconscionable that "management" gets 10% for monies that are collected to go into reserves. This is simply a transfer of money to a bank account, no coordination or other action needed.

I have seen instances where the resort boards have considered alternatives to the corporate input related to brand standards, sometimes with MVW agreeing to them and sometimes not. So in my experience, which admittedly is not the same as every other Marriott timeshare owner, efforts at the resort level to, "keep costs down" are at least attempted.

<shrug> I look at the stipulated 10% (and slightly higher for non-US resorts) Management Fee as the price of doing business with Marriott Vacations Worldwide. If I thought it, "unconscionable," I'd probably choose to not do business with them.

 

[Steve Fatula]

I have seen instances where the resort boards have considered alternatives to the corporate input related to brand standards, sometimes with MVW agreeing to them and sometimes not. So in my experience, which admittedly is not the same as every other Marriott timeshare owner, efforts at the resort level to, "keep costs down" are at least attempted.

<shrug> I look at the stipulated 10% (and slightly higher for non-US resorts) Management Fee as the price of doing business with Marriott Vacations Worldwide. If I thought it, "unconscionable," I'd probably choose to not do business with them.

I agree with this. I find my resort does a pretty good job actually vis-a-vis MF. It's not 1%, but, they do make efforts to cut expenses where possible.

 

[JIMinNC]

My post was not really an accusation, more of conjecture. I was pointing out that in this self-dealing structure, there a little to no incentives to "keep costs down." And, I find it unconscionable that "management" gets 10% for monies that are collected to go into reserves. This is simply a transfer of money to a bank account, no coordination or other action needed.

I understand your perspective on the 10% management fee being at somewhat cross purposes to keeping costs down. Having said that, compared to an alternative structure that we once had to live with in the Diamond Resorts organization, the 10% approach is preferable. With our old Diamond ownership, Diamond decided what their management fee was and since they controlled the board, they could vote themselves a big raise any time they wanted to. I recall a couple of years when the operating costs of the resort were flat or up only marginally, but the management and administrative fees paid to DRI went up double digits. If I recall correctly, I seem to recall one year that was close to +20% for the management fees. So, given that history, the 10% pro-rata limitation seems preferable. No, there is no real incentive to keep costs down, but they can't just arbitrarily vote themselves a raise.

 

[bazzap]

I have seen instances where the resort boards have considered alternatives to the corporate input related to brand standards, sometimes with MVW agreeing to them and sometimes not. So in my experience, which admittedly is not the same as every other Marriott timeshare owner, efforts at the resort level to, "keep costs down" are at least attempted.

<shrug> I look at the stipulated 10% (and slightly higher for non-US resorts) Management Fee as the price of doing business with Marriott Vacations Worldwide. If I thought it, "unconscionable," I'd probably choose to not do business with them.

Yes, in at least some of the International resorts we pay 50% higher Management fee at 15%.
I wish we did only have to pay 10%.

 

[Superchief]

I’ve been shouted down when expressing concerns about the average 5% increases on an owners forum, by an owner/board member no less. It was a nasty enough attack when I questioned the increases and extra amenities added each year I left the group.

We’ve held on because we enjoy the system and resorts. But if we’re going to be talking 10-15% increases when all others are holding steady at 3-5%/year? We’ll be bailing out sooner rather than later.

Marriott and the board need to get a hold on these, IMHO, ridiculous fee increases. At least at this one resort. Grand Chateau held the line this year after several years of free increases out of line when compared to other higher end timeshares in Vegas. Ocean Pointe has ALWAYS been out of line compared to others IMHO. But our BOD keeps adding amenities, art work/sculptures or other not so necessary expenses and, Ocean Pointes year over year MF increases have been higher than what appears to be average, even for MVC.

I had a similar bad experience with this same board member, and I voted against them on the current ballot. I couldn't find any helpful information on the owner's forum, so I still am not aware of any explanation for this exorbitant increase. There is a new GM, so hopefully this isn't a sign of things to come.

 

[Superchief]

I sent an email to the general manager and asked him all of these questions. I will let you know when I get a response.


Sent from my iPhone using Tapatalk

Did you ever receive a response from the new GM? I had a question about the budget for Oceana Palms and received an email response from their GM within a couple of days. I am curious regarding where the new Ocean Point GM came from. The previous one was excellent.

 

[Luvtoride]

Did you ever receive a response from the new GM? I had a question about the budget for Oceana Palms and received an email response from their GM within a couple of days. I am curious regarding where the new Ocean Point GM came from. The previous one was excellent.

Yes, I did hear from Dennis as we are trying to arrange a time for a phone call. I posed many questions and offered to talk about them. We didn’t hook up last week but we will try again to talk this week.



Sent from my iPad using Tapatalk

 

[dougp26364]

I had a similar bad experience with this same board member, and I voted against them on the current ballot. I couldn't find any helpful information on the owner's forum, so I still am not aware of any explanation for this exorbitant increase. There is a new GM, so hopefully this isn't a sign of things to come.

That particular board member has virtually NO qualifications to be in the board if you read their bio. Hopefully they’re off the board after this year.

 

[Luvtoride]

Yes, I did hear from Dennis as we are trying to arrange a time for a phone call. I posed many questions and offered to talk about them. We didn’t hook up last week but we will try again to talk this week.



Sent from my iPad using Tapatalk

I spoke with Ocean Pointe GM, Dennis Nau yesterday about the budget questions. We discussed the following:
- Increase in some of the Personnel costs (activities, HR and front desk) is primarily due to the need to increase salaries to be more competitive with other businesses in the area. OP has had an extremely high personnel turnover rate which makes running the resort effectively very challenging.
- Insurance- probably the biggest increase and one that the board is questioning as well. They will have a board member familiar with insurance to answer questions and explain about the large increase in this expense. I have submitted several specific questions to Dennis, to pose and discuss on the insurance expense increase.
- Owner Services- the $812,000 charge are for services provide by MRHC (Marriott Resorts Hospitality Corp) separate from Marriott management fees. These costs have always been in the budget but they were previously listed "below the line" of operating expenses and this was inconsistent with other Florida Club resorts. By moving this charge to Operating expenses, MVC can assess their 10% management fee on these expenses, thus it is increasing Management fee by about $81,000.
- Management fee- as previously discussed, this reflects fully funded reserves, which will be voted on at the board meeting on 11/13. If it is voted NOT to fully fund reserves, this charge will decrease.

This is Dennis' 1st budget cycle since his arrival at Ocean Pointe around Easter. He is concerned about all of the feedback he's received from owners about this preliminary budget and understands our frustration. He did say that MVC management is changing their compensation policies, in particular bonus awards to GM staff to better reflect control of costs with a target of a 3% or under cost increase. This will require GM's to be more proactive in pursuing expense control initiatives and finding new sources of revenue to help offset expense increases.

Dennis had previously been the GM at Marriott's Fairway Villas in NJ as well as having management roles at the Marriott Marquise and Marriott Eastside in NYC. He has been with Marriott for 30 years and seems to bring a great deal of experience to his role here at OP.

I'm sure we will get more information after the finance committee meeting today and the board meeting tomorrow. I will try to follow up with him later this week.

 

[Superchief]

Thanks for this helpful information. It appears that Dennis is in a very difficult situation and I hope some of these costs can be greatly reduced for the final MF's.

I am concerned that many of the cost increases are driven by the implementation of the DC points program. Activities, front desk, HR, and 'Owner Services' have dramatically increased due to the shorter stays and increased spending on activities to generate higher customer ratings. I also thought that 'owners services' should be covered in the management fee Marriott already takes, since it is the primary service provided by the corporation. The 10% management fee shouldn't be pure profit margin for MVC. I'm not aware of any owner's services that are exclusive to individual resorts.

I am happy to see the incentive to keep operating expense increases to 3% or less, but most of my MVC resorts have exceeded that target over the past few years. I would also like to know if the resort GM's and BOD's have any impact or awareness of the amount contributed by the DC trust to the individual resorts. Since most of these increases are driven by the point program, the trust should be absorbing more of these expenses.

 

[jimf41]

Thanks Brian & Chief for keeping us informed. I appreciate your work.