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

[dioxide45]

You could be absolutely 100% correct and I would not be one bit surprised.

If Marriott simply allows a resort to participate in Abound, they get nothing more than the Club Dues from each owner that chooses to participate. Now if they manage the resort and allow the owners to participate in Abound, they get the Club Dues plus the management fee. I would think a resort would need to be real special in order for them to just fold it into Abound but not also manage the property.

 

[Superchief]

The assertion that the board minutes were incorrect may or may not be true, but me thinking that the board was ridiculous from the minutes had more to do with how it lined up with the statement that they released which in large part says that they’d like to tie maintenance fee increases to the CPI in San Francisco. I think that would work well most years but Lake Tahoe had massive fires that had a large increase in insurance fees as well as inflation far higher than what I’ve seen in my lifetime.

Wouldn't the CPI in San Francisco be impacted by the same inflationary pressures and large insurance increases that the Tahoe area is facing? Perhaps this isn't the best inflation target, but I wish other MVC resorts would have guidelines relative to inflation when determining MF budgets. Most of my MF's have increased at a much higher rate than inflation over the past few years. Many expenses are flexible and any uncontrollable increase can be counterbalanced by a discretionary decrease. Staffs have been growing at a unsustainable pace, especially activity staffs. These require additional HR and benefits. MVC has no incentive to control expenses, so it is up to the BOD's and owners to do so.

Regarding this situation, I don't have enough information to make a judgement, but both parties share the blame and appear to focus on attacking each other rather than discuss a compromise. I see why many consider the BOD to be at fault, but there is little information about management's actions.

 

[Ralph Sir Edward]

But I believe, if MVC pulled out of GRCLT they would then be bound by the reservation procedures of the resort itself and may not be able to necessarily allow single night reservations. If the resort isn't managed by MVC, I don't see it being part of Abound. Owners there would no longer have the ability to elect for club points and the MVC trust would have to use the quarters and interests it owns there in line with the reservation procedures spelled out in the underlying documents.

And this brings back the questions I have had about the original governing documents (non-Marriott). What to they allow, and not allow?

Also the missing document(s) not discussed. Those that allowed Points conversions and access to the Abound program?

That is why the second part of the BOD complaint is so interesting. How did MVC acquire the intervals they own? Was that actually permitted by the document chain? Or were they treated as if they were any standard MVC developed property? I don't know, but in a "divorce" they are important facts, and should be clearly defined in the docs (that we don't have. . . )

 

[LeslieDet]

As of 2014 when I stopped tracking detailed inventory, it looks like the trust owned about 15% of the inventory at GRCLT.

199 Units
Counts as of May 2014
1/4 Share - 102
5/52 Interest - 48

I don't know how aggressive they would have been trying to reacquire inventory. I know that Monarch grew a lot in the trust, but that is a different situation.

Just FYI - I'm not sure how this matches up, but the disclosures for the Trust when I purchased points some years ago listed the Trust ownership at GRCLT as follows: "A total of 1,550 individual timeshare interests have been contributed to the Trust which is the equivalent of 29.81 units (52 timeshare interests per unit)."

The report indicates it was amended May 7, 2015, but originally dated June 1, 2010. I did not see anything in the report to match to the descriptions you refer to - ie the "1/4 Share" or the "5/52 Interest". And, I do not know if the Component count was revised at the time the report was updated in 2015.

 

[VacationForever]

Wouldn't the CPI in San Francisco be impacted by the same inflationary pressures and large insurance increases that the Tahoe area is facing? Perhaps this isn't the best inflation target, but I wish other MVC resorts would have guidelines relative to inflation when determining MF budgets. Most of my MF's have increased at a much higher rate than inflation over the past few years. Many expenses are flexible and any uncontrollable increase can be counterbalanced by a discretionary decrease. Staffs have been growing at a unsustainable pace, especially activity staffs. These require additional HR and benefits. MVC has no incentive to control expenses, so it is up to the BOD's and owners to do so.

Regarding this situation, I don't have enough information to make a judgement, but both parties share the blame and appear to focus on attacking each other rather than discuss a compromise. I see why many consider the BOD to be at fault, but there is little information about management's actions.

Many insurance companies pulled out of insuring homes in Tahoe area due to fire risks. Tahoe homeowners' insurance rates have gone through the roof. San Francisco homes do not face the same fire risk.

 

[wuv pooh]

Wouldn't the CPI in San Francisco be impacted by the same inflationary pressures and large insurance increases that the Tahoe area is facing? Perhaps this isn't the best inflation target, but I wish other MVC resorts would have guidelines relative to inflation when determining MF budgets. Most of my MF's have increased at a much higher rate than inflation over the past few years. Many expenses are flexible and any uncontrollable increase can be counterbalanced by a discretionary decrease. MVC has no incentive to control expenses, so it is up to the BOD's and owners to do so.

Yes and no. As stated there were wildfires in Tahoe that led to large losses that did not happen in San Fran. Similar to ocean front properties in FL vs. Orlando. Insurance is spread across the whole pool, but higher risks are impacted even more. If I recall correctly, one large gap was in anticipated rental income. Clearly this is unrelated to CPI. IMHO the largest impact is that staff can no longer afford to live where the resorts are. Think Hilton Head, Marco Island, etc. This means they need to pay them a whole lot more to live nearby or pay them enough to make commuting viable. Or they have to come up with housing solutions like using students from the hospitality school in Orlando. If you have not done a construction project since 2019, just know that prices have doubled +. They also have to meet expectations. I can choose to use cheaper toilet paper if I want but Marriott will get complaints. It all adds up. Overall I think Marriott has a good supply chain and contracts and uses it's market leverage to keep a decent balance between cost and quality. You could spend your life nit picking their choices, but when divided by 50 owners per week it becomes a nit. It is not worth my time to bid out all the contracts and track everything in order to save 5% when that ends up being $90. That does not even pay for an hour of my time, and is why we hire a management company. Who can do it for materially cheaper while still providing the reservation and trading system?

 

[dioxide45]

Just FYI - I'm not sure how this matches up, but the disclosures for the Trust when I purchased points some years ago listed the Trust ownership at GRCLT as follows: "A total of 1,550 individual timeshare interests have been contributed to the Trust which is the equivalent of 29.81 units (52 timeshare interests per unit)."

The report indicates it was amended May 7, 2015, but originally dated June 1, 2010. I did not see anything in the report to match to the descriptions you refer to - ie the "1/4 Share" or the "5/52 Interest". And, I do not know if the Component count was revised at the time the report was updated in 2015.

I forgot I had those disclosures that someone posted here a few weeks ago. The CA disclosure indicates the trust owns 36% of GRC Tahoe and 32% of GRC Tahoe III. I don't know where GRC Tahoe II is, if it even existed or perhaps it is now considered Timber Lodge. This disclosure is as of March 2023.

As to how they came to own those intervals. The BOD seems to imply that there were a small number that were improperly transferred to MORI after foreclosure by the HOA. That just seems to be a few quarter shares or interests. Nothing close to the 36%/32% ownership now. The largest chunk of points added to the MVC trust was about 2 million added in early 2011. I suspect these were unsold quarters. I suspect they required a number of interests over the years through foreclosure and ROFR.

 

[Hindsite]

Wouldn't the CPI in San Francisco be impacted by the same inflationary pressures and large insurance increases that the Tahoe area is facing?

CPI, or any Index, would need to be made up of components that are the same types of expenditure as is incurred in running a resort.
I did a quick look for one of mine and found that the correlation was low, so its a poor basis, but useful for general comparison.

 

[LeslieDet]

For some reason I don’t have July 22 minutes

If you were an owner at GRCLT in July 2022, you have a right to request prior year minutes from the manager.

Also, just an FYI, the purpose of minutes is to record the official business of the board. Minutes are not intended to be an outlet for grievances among the members, board or management. Also, the person who authored the HOA laws in CA has a website, Davis-Stirling.com. It is user friendly. The author recommends "minutes should reflect decisions and the reasons for those decisions, not conversations". This is "because the Business Judgment Rule requires that boards satisfy their fiduciary duties when making decisions." Thus, the BOD cannot simply put in the minutes whatever it wants, the minutes must reasonably reflect the official business of the HOA.

 

[jp10558]

Who can do it for materially cheaper while still providing the reservation and trading system?

Isn't one of the arguments Hilton or Wyndham have substantially similar(ish) systems but seem to do it for substantially less maintenance fees for the resorts? Granted, Hilton HGVC is more of a direct comparison than Wyndham, but it seems like either one could potentially do it for substantially less than Marriot MFs - at least as compared averaged across the systems.

 

[Ken555]

Isn't one of the arguments Hilton or Wyndham have substantially similar(ish) systems but seem to do it for substantially less maintenance fees for the resorts? Granted, Hilton HGVC is more of a direct comparison than Wyndham, but it seems like either one could potentially do it for substantially less than Marriot MFs - at least as compared averaged across the systems.

HGVC charges less than 10% management fee on expenses? If so, what amount?


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[timsi]

HGVC charges less than 10% management fee on expenses? If so, what amount?


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Correct me if I am wrong but I believe that the reservation system falls under "owner services " in the Marriott/Vistana system and is charged separately from the management fee. I do not know how it works for the Hilton resorts

 

[dioxide45]

HGVC charges less than 10% management fee on expenses? If so, what amount?


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I believe they are referring to management fees as a whole?

 

[VacationForever]

HGVC charges less than 10% management fee on expenses? If so, what amount?


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I don't know but I believe they nickle and dime you for everything, reservations, banking etc.

 

[Ken555]

I believe they are referring to management fees as a whole?

Ok… so to compare appropriately, we would need to see the budget from a comparable HGVC property.


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[dioxide45]

Ok… so to compare appropriately, we would need to see the budget from a comparable HGVC property.


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I would think so. It seems that GRCLT has a fairly low maintenance fee per week. At least as compared to most other Marriott resorts. It isn't necessarily cheap because you own 5 or 13 weeks. That said, if looking week for week at a comparable resort like Grande Vista and HGVC SeaWorld, we would want to see the budget from each to get an idea of why there is nearly a $500 difference per week between the two resorts/companies.

 

[wuv pooh]

Isn't one of the arguments Hilton or Wyndham have substantially similar(ish) systems but seem to do it for substantially less maintenance fees for the resorts? Granted, Hilton HGVC is more of a direct comparison than Wyndham, but it seems like either one could potentially do it for substantially less than Marriot MFs - at least as compared averaged across the systems.

Not sure. I have only been to one HGVC resort - Tuscany Village in Orlando. It seemed nice enough, probably comparable to Grande Vista although I did not have kids then so not sure of the activities.

Grande Vista Operating - $1,254
Tuscany Village Operating - $1,026

So 22% higher for Marriott. No idea if they are like for like or if there are significant differences. Maybe there is something to learn from how they manage that could help a Marriott BOD. My point being that $228 is a nit to me and being Marriott Lifetime Titanium I much prefer the way I am treated at Marriot Resorts and II options sans Marriott to RCI options sans HGVC. If they charge for services that I get included in my Marriott Club Dues then net/net there is not much financial difference in the end. I would never vote to change to HGVC.

 

[Ken555]

I would think so. It seems that GRCLT has a fairly low maintenance fee per week. At least as compared to most other Marriott resorts. It isn't necessarily cheap because you own 5 or 13 weeks. That said, if looking week for week at a comparable resort like Grande Vista and HGVC SeaWorld, we would want to see the budget from each to get an idea of why there is nearly a $500 difference per week between the two resorts/companies.

It may also be interesting to compare it along with the Hyatt resort in Tahoe, since it’s not that far away so the same regional impacts would, I assume, apply to both. Comparing to a Florida resort may be more uncertain. And I understand that Hyatt and Marriott are…related.


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[dougp26364]

Other areas one could look at would be Las Vegas, where Hilton has several resorts. You could also look at Oahu’s and Breckenridge CO. I’ve always felt that Marriotts resort in Breckenridge had an outrageous MF when compared to other resorts in Breckenridge.

 

[dioxide45]

It may also be interesting to compare it along with the Hyatt resort in Tahoe, since it’s not that far away so the same regional impacts would, I assume, apply to both. Comparing to a Florida resort may be more uncertain. And I understand that Hyatt and Marriott are…related.


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The thought was to compare like resorts in the same area. It doesn't really matter which area.

 

[Ralph Sir Edward]

I don't know but I believe they nickle and dime you for everything, reservations, banking etc.

They do, but OTOH, they don't have the "skim" that Marriott does.

 

[SueDonJ]

If Marriott simply allows a resort to participate in Abound, they get nothing more than the Club Dues from each owner that chooses to participate. Now if they manage the resort and allow the owners to participate in Abound, they get the Club Dues plus the management fee. I would think a resort would need to be real special in order for them to just fold it into Abound but not also manage the property.

This is based on nothing more than imagination, I haven't done the math and am not sure of the process because Abound Trust conveyances are of specific intervals, but ... how much of a coincidence ( ) would it be if the few foreclosed intervals that the GR Tahoe BOD claims MVW conveyed to the trust in violation of the docs, are exactly the number/specific intervals that would be needed to sever the Management Agreement for only certain building(s) on the property?? Especially if the bulk 2011 conveyance was of unsold intervals in the last building completed?

 

[Ralph Sir Edward]

This is based on nothing more than imagination, I haven't done the math and am not sure of the process because Abound Trust conveyances are of specific intervals, but ... how much of a coincidence ( ) would it be if the few intervals that the GR Tahoe BOD claims MVW conveyed to the trust in violation of the docs, are exactly the number/specific intervals that would be needed to sever the Management Agreement for only certain building(s) on the property?? Especially if the bulk 2011 conveyance was of unsold intervals in the last building completed?

Once again, we don't know the terms and conditions of the merger. Did Marriott receive an ownership interest in those weeks, or was it a "timeshare lite" agreement, where Marriott got to sell them and keep the profit? We have no accurate knowledge at all.

 

[dioxide45]

Once again, we don't know the terms and conditions of the merger. Did Marriott receive an ownership interest in those weeks, or was it a "timeshare lite" agreement, where Marriott got to sell them and keep the profit? We have no accurate knowledge at all.

Does it matter? For interests in the trust, MVC retains voting control.

 

[SueDonJ]

Once again, we don't know the terms and conditions of the merger. Did Marriott receive an ownership interest in those weeks, or was it a "timeshare lite" agreement, where Marriott got to sell them and keep the profit? We have no accurate knowledge at all.

Yes, I understand that the BOD is claiming that Marriott violated the rules by attaining fractionals via nonjudicial foreclosures and then "conveying title to Marriott affiliates" (quote paraphrased from the BOD's response letter,) which aren't we all assuming means that Marriott conveyed them to the Abound Trust?

And you're entirely correct, without the details of how those transactions occurred it's impossible for us to verify any and all speculation - but I'm not looking to verify anything, just trying to think why after all this time of GR Tahoe intervals being conveyed to that trust, the BOD is challenging only these particular "at least six (and perhaps more than ten)" few intervals.