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.
