Renegotiating Marriott Contract

[marksue]

The Marriott Contract at the Ocean club is for renewal. Has any location renegotiated the terms of the agreement. It seems out of lien that when our fees go up Marriott gets more money. The fees collected are to support the property not pay Marriott.

Anyone have any info on any renegotiations that have taken place.

 

[TheTimeTraveler]

The Marriott Contract at the Ocean club is for renewal. Has any location renegotiated the terms of the agreement. It seems out of lien that when our fees go up Marriott gets more money. The fees collected are to support the property not pay Marriott.

Anyone have any info on any renegotiations that have taken place.

I believe Marriott gets paid a percentage of expenses as their management fee.

I'm sure others will add more comments.



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[SueDonJ]

I don't remember ever reading on TUG about a resort that was able to renegotiate a change to the 10% management fee when the management contract came up for renewal. It's stipulated in the governing docs so theoretically could be changed by an ownership majority voting for an amendment, but I don't know of any resort, either, where such an amendment was proposed (nevermind passed.) I'd be worried that Marriott would simply not renew the management contract if there was enough of a push from ownership that the 10% fee to Marriott would be jeopardized.

 

[dioxide45]

I believe that Beach Place renegotiated their contract a couple years back. Don't think they changed the 10% management fee though, but they were able to get some concessions from Marriott.

 

[siberiavol]

Harbor Point looked at some options two or three years ago. If I recall from a conversation with the GM the other big name management companies would have been more expensive.

 

[timeos2]

Anything can be negotiated - the Board should look at all options and make demands for the good of the owners (they don't exist to support the Marriott bottom line). To simply accept whatever terms Marriott or any other management asks for isn't doing the Board's fiduciary duty for the owners.

Good luck - hope they can get meaningful compromises.

 

[dioxide45]

If I remember correctly, the opinion was that the Ocean Club HOA had a very pro Marriott stance. If that is correct, not sure how much they try to do the right thing for owners.

 

[fizzysoup]

Phuket Beach Club & Asia Pacific Points Club

The Marriott management fee for both of these is 15% - so it goes without saying that the higher the maintenance fees the higher the profit for Marriott or should I now say MVCI/MVWC

 

[SueDonJ]

If I remember correctly, the opinion was that the Ocean Club HOA had a very pro Marriott stance. If that is correct, not sure how much they try to do the right thing for owners.

Plus, I'm not sure that it is the right thing for the BOD to do at any Marriott resort, to push for something that might force Marriott to exercise its unilateral right to void the management contract and walk away from the resort. I would be very surprised to hear that any resort successfully negotiated a less-than-10% management fee, not when it would set the precedent for every other resort to push for the same concession. I think it's more possible for something like what you say happened at Beach Place, that Marriott might be willing to negotiate other terms. That 10% is just too dang important to Marriott, and when one resort gains that upper hand all the rest are going to line up to be next.

 

[suzannesimon]

Excuse my ignorance, but if Marriott walked away from the management of a resort, would the resort then cease to be part of MVCI? You couldn't very well have Hilton managing a MVCI resort, could you? It seems like owners and Marriott are co-dependent.

 

[dioxide45]

Plus, I'm not sure that it is the right thing for the BOD to do at any Marriott resort, to push for something that might force Marriott to exercise its unilateral right to void the management contract and walk away from the resort. I would be very surprised to hear that any resort successfully negotiated a less-than-10% management fee, not when it would set the precedent for every other resort to push for the same concession. I think it's more possible for something like what you say happened at Beach Place, that Marriott might be willing to negotiate other terms. That 10% is just too dang important to Marriott, and when one resort gains that upper hand all the rest are going to line up to be next.

I agree, it would be no more irresponsible for the HOA to pull out of the Marriott system than it would to not look for the best price. Their job is to find the right balance. There is value to many owners in the Marriott name on the door, as much as many people here thing there isn't. If my resorts dropped Marriott, I would be pretty upset. If we all went for cheapest price, there would be absolutely no mini systems.

 

[dioxide45]

Excuse my ignorance, but if Marriott walked away from the management of a resort, would the resort then cease to be part of MVCI? You couldn't very well have Hilton managing a MVCI resort, could you? It seems like owners and Marriott are co-dependent.

Anything is possible. If a resort is not under Marriott management, it is free to sign a contract with any other management company it desires. It just happened with the Planet Hollywood in Las Vegas, it was a Westgate property but will now be managed by Hilton.

 

[billymach4]

Black Eye for Marriott

Aruba Ocean Club as most of you know is sandwiched between the Marriott Stellaris on one side, and the Marriott Surf Club on the other.

How would this look

Starwood Aruba Ocean Club
Hilton Aruba Ocean Club
Royal Aruba Ocean Club

Perhaps Aruba Ocean Club managed by Groupo Mayan. I like this one the best.

 

[SueDonJ]

Excuse my ignorance, but if Marriott walked away from the management of a resort, would the resort then cease to be part of MVCI? You couldn't very well have Hilton managing a MVCI resort, could you? It seems like owners and Marriott are co-dependent.

Marriott in the past has ceased management operations of several resorts and because of that, they are no longer Marriott resorts. Two are on Hilton Head Island - Swallowtail and Spicebush - and two were a part of the complex in Breckenridge, CO - Aspen and Cedar.

I don't know how it works when a contract is broken, what it means specifically for the common areas of resorts that are owned by Marriott and not the Weeks owners. And definitely, there are new ramifications with the DC as far as Weeks owned by Marriott which they've conveyed to the DC Trust. But yes, when Marriott ceases management of a resort, the Marriott name will come off of it and any Marriott Rewards-related benefits those owners are entitled to will cease. I think that the assumption on TUG is that any DC enrollment benefits will cease as well.

 

[SueDonJ]

Aruba Ocean Club as most of you know is sandwiched between the Marriott Stellaris on one side, and the Marriott Surf Club on the other.

How would this look

Starwood Aruba Ocean Club
Hilton Aruba Ocean Club
Royal Aruba Ocean Club

Perhaps Aruba Ocean Club managed by Groupo Mayan. I like this on the best.

How does the set-up look with the five buildings at Breckenridge, three that are still Marriotts and two that are not?

 

[dioxide45]

I am also curious how management contracts at RTU properties work. Are the Aruba properties not RTU? If so, do the owners really own anything other than the right to use? If not, who owns the land and buildings?

 

[billymach4]

As I understand the RTU in Aruba is designed so that no one entity owns beachfront property. They are based on 60 years usage. If you are a good hotel/timeshare operator then in 60 years the Aruba authority would in all likelihood renew the RTU agreement.

 

[billymach4]

How does the set-up look with the five buildings at Breckenridge, three that are still Marriotts and two that are not?

Can someone who is familiar with the Breckenridge and the Aruba locations chime in. I am only familiar with the layout of Aruba.

 

[dlpearson]

Marriott in the past has ceased management operations of several resorts and because of that, they are no longer Marriott resorts. Two are on Hilton Head Island - Swallowtail and Spicebush - and two were a part of the complex in Breckenridge, CO - Aspen and Cedar.

I don't know how it works when a contract is broken, what it means specifically for the common areas of resorts that are owned by Marriott and not the Weeks owners. And definitely, there are new ramifications with the DC as far as Weeks owned by Marriott which they've conveyed to the DC Trust. But yes, when Marriott ceases management of a resort, the Marriott name will come off of it and any Marriott Rewards-related benefits those owners are entitled to will cease. I think that the assumption on TUG is that any DC enrollment benefits will cease as well.

Clarification--it's actually the Streamside property/buildings in Vail, not Breckenridge. As a Cedar owner, I luckily was able to give mine away about a year ago after Marriott and the HOA parted ways.

 

[SueDonJ]

Clarification--it's actually the Streamside property/buildings in Vail, not Breckenridge. As a Cedar owner, I luckily was able to give mine away about a year ago after Marriott and the HOA parted ways.

Thanks for the correction.