Trouble - Marriott Grand Residence Tahoe [Management Agreement in Jeopardy?]

[AlmostRetired]

Regarding my direct communication with corporate and the legal department, I created a FB group for MVC owners in 2023, and I address MVC owner topics in my group. As a voice for my fellow owners, I have and will continue to communicate directly with corporate when there are matters that impact my fellow owners or concerns I have regarding my specific ownership. I've found the MVW corporate staff and the legal department willing to respond to my inquiries. And, I appreciate their willingness to communicate directly with me.

Most people in TUG are unaware of your contributions across many of the Marriott FB groups including those you are an admin for. Being part of TUG for many years, I would put your credibility, knowledge and contribution on par with a number of well respected members of TUG. Most people can be anonymous behind their user name. Anyone on Marriott FB groups can easily guess who you are from yours.

 

[davidvel]

Folks like you enjoy riling up others by pushing disinformation disguised as outrage at corporate conduct, regardless of whether or not that conduct complies with the applicable law.

@timsi hasn't done this.

I'm not advocating for or against the company here, and your inability to see that is frankly ridiculous.

Rude.

From the info that has been provided in this particular feed, FWIW the only opinion I've formed is that the existing BOD has made unreasonable demands and is unable to grasp that there are operating costs for a resort like GRC including insurance and utilities that cannot be boxed into adjustments tied solely to an irrelevant San Francisco CPI; and IMO the BOD's insistence that no bills be paid if they exceed a budget line item is ludicrous, and reeks of either their ineptitude or their bad faith breach of fiduciary duty to the owners that BOD is supposed to represent.

None of this has been established in this thread, and certainly not independently.

You may not like it, but I was basing my opinion that the BOD appears to be failing at fulfilling its fiduciary duties based upon accepted facts in this feed, which facts are represented by minutes from July 2023, as well as the BOD president's own words. They cling to an irrelevant CPI and they are aware of the operating deficits and increases in utilities and insurance and nevertheless refuse to acknowledge that it is more costly to operate the location.

None of this has been established in this thread, and certainly not independently.

I also find it odd that you are so blinded by your hatred towards the corporate world that you refuse to even acknowledge for a moment that the attitude the GRCLT BOD has taken as it relates to the budget and site operating costs and how the BOD insisted on tying the budget to an irrelevant CPI is somehow appropriate and should, in the world in which you function, be accepted without calling it out. Aren't you the one who only cares about the "court of public opinion"? LOL

@timsi's posts don't support your aspersions. The claimed attitude of the board has not been established in this thread, and certainly not independently. LOL used toward a poster is childish.

 

[bizaro86]

Clearly, you've never read any of my discussion pieces on misleading sales pitches and how they violate the terms of the corporate ethics code. I've been writing about misleading pitches for years now.

You can generalize my comments however you want in an effort to skew the meaning. You jump to an unsupported conclusion that purported unethical and reprehensible conduct happened, without any facts. You may not like it, but I was basing my opinion that the BOD appears to be failing at fulfilling its fiduciary duties based upon accepted facts in this feed, which facts are represented by minutes from July 2023, as well as the BOD president's own words. They cling to an irrelevant CPI and they are aware of the operating deficits and increases in utilities and insurance and nevertheless refuse to acknowledge that it is more costly to operate the location. But sure, go ahead and continue tossing out irrelevant claims relating to misleading sales pitches. I'll stick with info that is offered in an effort to help owners at GRCLT.

You selected complies with the law as your standard, I'm just pointing out that only a lawyer would think that was a good bar to try and clear, most people would say that complying with the law is insufficient to meet normal ethical standards.

Your entire rambling second paragraph doesn't follow from my post in any way. I'm not generalizing anything from your post and have no first hand knowledge of the ethics of the board (and neither do you), and I haven't claimed that I do.

Maybe MVC smells like roses at the end of this and has done no wrong now or ever- but "complies with the law" is the type of ethical standard only a lawyer or timeshare salesman would like.

 

[pedro47]

Are there some hidden agendas on both sides of this disputes.

 

[dougp26364]

I……need……more……popcorn

 

[VacationForever]

Are there some hidden agendas on both sides of this disputes.

I suspect that the board wants Marriott out, and Marriott also wants out. The Board is trying to look like the good guys in their communication to owners but they smell pretty bad to me.

 

[Ralph Sir Edward]

I suspect that the board wants Marriott out, and Marriott also wants out. The Board is trying to look like the good guys in their communication to owners but they smell pretty bad to me.

I suspect you are partially right.

I remember decades ago when these type of organizations were set up. I read an article about them in Forbes, back in the day.
They were not set up as timeshares, but as fractional ownership, in order to be much higher end that a timeshare, so that high net worth people could buy into an expensive resort system and swap them among themselves, far away from the hoi polli. They sold in the $300K and up range, deliberately to eliminate the average timeshare owner. The sales pitch was that you weren't going to live in the resort area full-time, so you could have as much time there as you might want, without the headaches of maintaining an extra high end residence, and the option of swapping with other high end owners for other similar resorts. (A very different sales pitch, to a totally different clientele than a timeshare clientele.)

Apparently, it didn't work out all that well, as they started getting acquired by existing timeshare companies; who wanted to treat them as timeshares to their existing client base. When I heard about this, i thought "Boy, this is going to work out real well! Treating multi-millionaires who spent $300, $400, $500K to get away from middle class vacationers as middle class vacationers. . ."

And it hasn't.

This is the underlying culture clash that this is all about.

 

[timsi]

I suspect that the board wants Marriott out, and Marriott also wants out.

Marriott may publicly threaten to leave as a bargaining tactic, but I doubt that's their true intention or what they'll actually pursue. Apart from characterizing resort management as a high-margin recurring business, they reportedly own about 20% of the resort (if the information in this thread is accurate). It's easier for them to optimize rental income when they manage both the resort and the reservation system. For the same reason, they wouldn't want the resort to leave Abound, as it provides more flexibility for them to elect their own inventory for Abound points and rent elsewhere when it's more profitable. Additionally, consider they also provide other services to the resorts, presumably for a profit. Timing-wise, it's particularly unfavorable to approach investors next quarter and explain potential shrinking management revenue. If the current management and the BOD can't be friends even with shared interests, parting ways could intensify conflicts, leading to more severe consequences. Moreover, introducing a new management team could lead to a fresh perspective on the current management's actions, potentially fueling more legal battles with owners, escalating costs, and increasing the risk of an unfavorable outcome.
Assuming that the initial posturing phase is nearing its end, I imagine that Marriott and the board will need to reach a mutual understanding to navigate the situation effectively.

 

[Dean]

I suspect that the board wants Marriott out, and Marriott also wants out. The Board is trying to look like the good guys in their communication to owners but they smell pretty bad to me.

Regardless of any hidden agendas, it's looking like one or the other is basically going to happen. The only way I see this ending with both in place is either with the BOD backing down or a "compromise" that largely favors the Marriott side. I think we all have a dog in the fight to a degree because it has implications to all of us judging our participation with MVC.

 

[Dean]

Marriott may publicly threaten to leave as a bargaining tactic, but I doubt that's their true intention or what they'll actually pursue. Apart from characterizing resort management as a high-margin recurring business, they reportedly own about 20% of the resort (if the information in this thread is accurate). It's easier for them to optimize rental income when they manage both the resort and the reservation system. For the same reason, they wouldn't want the resort to leave Abound, as it provides more flexibility for them to elect their own inventory for Abound points and rent elsewhere when it's more profitable. Additionally, consider they also provide other services to the resorts, presumably for a profit. Timing-wise, it's particularly unfavorable to approach investors next quarter and explain potential shrinking management revenue. If the current management and the BOD can't be friends even with shared interests, parting ways could intensify conflicts, leading to more severe consequences. Moreover, introducing a new management team could lead to a fresh perspective on the current management's actions, potentially fueling more legal battles with owners, escalating costs, and increasing the risk of an unfavorable outcome.
Assuming that the initial posturing phase is nearing its end, I imagine that Marriott and the board will need to reach a mutual understanding to navigate the situation effectively.

IMO MVC is willing to walk away from ANY resort given sufficient provocation. Thinking they are not I believe is naive. I wonder if they look at the Grand Residence model as something they'd rather not fool with.

 

[timsi]

Clearly, you've never read any of my discussion pieces on misleading sales pitches and how they violate the terms of the corporate ethics code. I've been writing about misleading pitches for years now.

Probably I misinterpret your comment as placing blame on the sales team without considering the company's role. Given that this is one of the most frequently discussed topics on social media, have you communicated with the company about it? Were you informed about the measures they have implemented to prevent such incidents from occurring again? Has anyone faced disciplinary actions, such as reprimands, demotions, or terminations, for making false statements during sales meetings?

 

[Ralph Sir Edward]

IMO MVC is willing to walk away from ANY resort given sufficient provocation. Thinking they are not I believe is naive. I wonder if they look at the Grand Residence model as something they'd rather not fool with.

Dean, then answer the question of - why did they acquire them in the first place? They were not Marriott developed, so they didn't follow Marriott rules in the first place.

 

[sponger76]

Dean, then answer the question of - why did they acquire them in the first place? They were not Marriott developed, so they didn't follow Marriott rules in the first place.

It's possible that at the time of purchase it seemed like a good idea, but over time they realized that it actually wasn't. Wouldn't be the first time in the corporate world that something like that happened. And it extrapolates to regular people's purchases as well.

 

[Superchief]

Based on all of the documents presented in this thread, the management company appears to have been at fault for at least the two following behaviors:
1. They overspent the agreed upon 2022 budget without informing the BOD or getting their agreement.
2. They issued the BOD unapproved minutes without 'draft' being on the minutes to indicate they had not been approved. (The 'draft' also included information that the BOD had no knowledge of.)

Quote from the BOD letter from above
'In September of this year, we discovered in the minutia of the Association’s 2022 Tax Return prepared by the Management Company that indicated the Management Company had overspent the 2022 Budget by $238,000 without ever disclosing it to the Board and without ever obtaining the prior written consent of the Board, as required by law. The Management Company has ignored our request to reimburse these funds.

Consequently, the Board recently authorized the filing of a lawsuit against the Management Company in El Dorado County Superior Court (Case No. 23CV2018) seeking, among other relief, reimbursement of the $238,000 improperly taken by the Management Company. This lawsuit also seeks the Court’s intervention as to the 2023 Budget and even 2024 Budget that were approved by the Board. As you know from Mr. McCormack’s letter, the Management Company essentially has admitted that it has overspent (or is about to) the Board-approved 2023 Budget by approximately $550,000, which we believe violates the Association’s governing documents, the Management Agreement, and applicable law. What the Management Company characterizes as a “shortfall” would be more accurately described as unauthorized overspending by the Management Company in excess of the fully funded and Board-approved 2023 Budget.'

I recognize that some expenses have increased significantly, but it appears the BOD was not given an opportunity to make budget modifications to other expenses that could have brought the budget back into balance. MVC obviously benefits from the excess because they receive an additional 10% management fee.

Although the BOD may have unrealistic expectations for some budget components, they still have a right to review any changes. The management company continues to show no interest in controlling expenses at the MVC resorts, as is demonstrated by continuing MF increases that exceed inflation.

 

[LeslieDet]

LOL used toward a poster is childish.

Frankly, you've done absolutely nothing to advance any substantive issues regarding the concerns of the owners and operations of GRC. You sure seem to have a focus on responding to whatever I may comment. Should I be flattered or seek a retraining order? You try and chide me for laughing at your co-conspirator pal, but I'm not the one who insisted that the only thing that matters on TUG is "the court of public opinion". Yep, that was your pal's response. LOL. It actually made me laugh. No mature owner dismisses applicable facts and law to only worry about what gossipmongers whisper. Now, THAT is childish. Perhaps you might want to convey that to your pal.

I'm going to continue to make substantive comments addressing the topic. What a shame that you do not have the best interests of the GRC owners at heart.

 

[Dean]

Dean, then answer the question of - why did they acquire them in the first place? They were not Marriott developed, so they didn't follow Marriott rules in the first place.

I can't speak for Marriott but there are several possibilities that could lead to MVC walking away. Some possibilities include that their goals could have changed, things didn't work out as planned, profits don't measure to their goals, those making the decisions for this area could have changed and they could decide it's simply not worth fighting with the BOD. MVC has cut other resorts loose in the past so they are willing to walk away in certain situations. I don't see a win-win that keeps the core of the BOD in tact and MVC as management. I don't see MVC tucking their tail and giving in. Regardless of the specifics, I doubt those here will ever know enough facts to truly determine fault.

 

[davidvel]

Frankly, you've done absolutely nothing to advance any substantive issues regarding the concerns of the owners and operations of GRC. You sure seem to have a focus on responding to whatever I may comment. Should I be flattered or seek a retraining order? You try and chide me for laughing at your co-conspirator pal, but I'm not the one who insisted that the only thing that matters on TUG is "the court of public opinion". Yep, that was your pal's response. LOL. It actually made me laugh. No mature owner dismisses applicable facts and law to only worry about what gossipmongers whisper. Now, THAT is childish. Perhaps you might want to convey that to your pal.

I'm going to continue to make substantive comments addressing the topic. What a shame that you do not have the best interests of the GRC owners at heart.

All unsupported gobbeldygook. I posted the lawsuit info and management agreement; I commented that the agreement allows the management company to pay costs of basic expenses (utilities, etc) and get reimbursed. I pointed out that you failed to cite to the source you quoted. I pointed out all of the false aspersions made by you against other posters.

I have no relationship with timsi, am certainly not his "pal" and comment equally about posts. Your belief that I am focusing on you is liekly because you post so much false, unsupported junk, opinion and slurs that it is hard not to respond. I couldn't care less about you personally, but do note your sour tone and personal attacks.

 

[davidvel]

I can't speak for Marriott but there are several possibilities that could lead to MVC walking away. Some possibilities include that their goals could have changed, things didn't work out as planned, profits don't measure to their goals, those making the decisions for this area could have changed and they could decide it's simply not worth fighting with the BOD. MVC has cut other resorts loose in the past so they are willing to walk away in certain situations. I don't see a win-win that keeps the core of the BOD in tact and MVC as management. I don't see MVC tucking their tail and giving in. Regardless of the specifics, I doubt those here will ever know enough facts to truly determine fault.

Correct. Marriott can leave at any time with proper notice. If they wanted to leave, they don't need to convince anyone to do so. The HOA needs to get owner approval.

It seems more that Marriott is looking NOT to leave, and is poisoning the well against the HOA so owners don't approve a cancellation of the management agreement, or pressure the board to tow the company line and keep expenses and the management fee rising. (I don't think they would vote to dismiss Marriott regardless as they lose so many benefits if that happens.) These resorts are a HUGE cash cow for Marriott Ownership Resorts, Inc. It would take a lot of significant disagreement with a board to lead to a separation.

 

[Dean]

It would take a lot of significant disagreement with a board to lead to a separation.

I think we have a lot currently don't we?

 

[timsi]

I think we have a lot currently don't we?

The dispute is over a few hundred thousand dollars, while a departure may result in the loss of millions of dollars in future revenue. Consider that Marriott's annual income exceeds 4 billion dollars. Even when factoring in that some income is not directly attributed to the resorts they manage and partially own, such as the revenue from Interval and the management of Aqua, the revenue per resort and per owner remains very significant. It operates as a well-oiled machine, with all parts designed to work together. Don't just focus on the management fee they would lose. Aside from the direct potential revenue loss, severing the contract will certainly come with other legal and operational costs for Marriott as well as headaches for the senior management.

 

[Dean]

The dispute is over a few hundred thousand dollars, while a departure may result in the loss of millions of dollars in future revenue. Consider that Marriott's annual income exceeds 4 billion dollars. Even when factoring in that some income is not directly attributed to the resorts they manage and partially own, such as the revenue from Interval and the management of Aqua, the revenue per resort and per owner remains very significant. It operates as a well-oiled machine, with all parts designed to work together. Don't just focus on the management fee they would lose. Aside from the direct potential revenue loss, severing the contract will certainly come with other legal and operational costs for Marriott as well as headaches for the senior management.

IMO MVC is far more willing to walk away than some feel they are. Plus it seems this is far more about the dollars to the BOD than to MVC. I get the sense t's become a peeing contest at this point. Plus any "compromise" that leaves the BOD intact creates likely future conflict. I can see MVC with minor compromises but it seems to me that any potential compromise that keeps the status quot is going to mostly be the BOD giving, maybe 70/30 at most in favor of MVC. Plus we don't know if the current BOD values MVC as much as a subset of the owners do. It could be that some of them want to see MVC drop them. There were those here on TUG that said MVC would never give up Spicebush or Swallowtai or Vaill but you know what happened there.

 

[Superchief]

All of the former MVC resorts that they walked away from were inferior properties that didn't live up to the newer brand standards. I'm not aware of any that were premium properties. The Grand Residence in Tahoe would definitely exceed their brand standards. I think the only reason MVC may be willing to give up this resort is due to their very low cost per MF. MVC management is already trying to reduce the rental activities of 'large owners' which likely includes many Grand Residence owners. As I recall, many fractional owners of the Ritz properties were very upset when MVC added these properties to the program.

 

[5finny]

I think the only reason MVC may be willing to give up this resort is due to their very low cost per MF.

I had the same thought but if that was the case wouldn't a logical first step be for Marriott to eliminate the enrollment option for resales that occur after a certain future date?

Plus if Marriott put more of their ownerships into the trust wouldn't that would allow Marriott to bring down the very high maintenance fees of trust points?

 

[timsi]

There were those here on TUG that said MVC would never give up Spicebush or Swallowtai or Vaill but you know what happened there.

While I understand your perspective on the historical context, I believe several factors complicate the situation.

Firstly, those were pre-MVC and pre-MVW if I am not mistaken, so for Marriott International, the mother company at the time, the loses were relatively smaller, and because the resorts were not included in a trust, the operational headaches were significantly lower. Hard to know now how much inventory Marriott owned at those resorts, but the inventory they own at MGR is certainly an important factor. This complexity can be particularly challenging compared to a standalone resort managed directly by Marriott.

Secondly, if a settlement isn't reached discreetly, sensitive details that Marriott might prefer to keep private could be exposed. My impression is that Marriott does not like to much sunlight on how they operate.

 

[Hindsite]

Plus if Marriott put more of their ownerships into the trust wouldn't that would allow Marriott to bring down the very high maintenance fees of trust points?

Its not about more into the Land Trust. What goes in needs to have a maint fee per club point that is less than the current maint fees for club points. What they tend to get back is lower season inventory, which has the same maint fee as high season inventory, but elects for less club points, making it more expensive on a MF/CP basis.