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

[SueDonJ]

Once more as an FYI for owners, especially if you intend to consult attorneys: all of the governing docs are compiled in the Public Offering Statement for each individual resort and owners are entitled to a copy. Direct purchasers are furnished with the POS at the time of purchase, resale/transfer owners may request a copy by contacting the Owner Modifications unit.

The POS format with which I'm familiar is a 5.5" X 8.5" paperback book with every letter- and legal-size document shrunk to fit; as an example the Barony Beach Club POS consists of 326 pages - these things are a lot! OM may tell you - and the governing docs do say - that they're entitled to charge a copying fee but I've never heard of any owner ever being charged that fee.

Contact info posted by me in a previous, recent thread:
FYI, I just confirmed via Chat on the website -
- the email address for Owner Modifications is owner.modifications@vacationclub.com
- to reach them by telephone call the usual Owner Services number and ask to be transferred to Owner Modifications
- for snail mail you can send it to the usual Owner Services address (Marriott Vacations Worldwide Owner Services; 310 Bearcat Drive; Salt Lake City, UT 84115-2544) but include "Attn: Owner Modifications."

 

[Ralph Sir Edward]

I really don't understand what difference it makes whether Marriott developed a resort from the ground up or acquired it from another entity or took over the management of it from another entity. Much as all of the ownership entitlements and restrictions that attach to a single interval (Week or Points or Fractionals) transfer to all succeeding owners upon resale/gift/family transfer unless the original docs or transfer docs specify differently, the same is true (and delineated as such) if a succeeding Manager takes over and a new Management Agreement is contracted. Any succeeding Manager would, therefore, be subject to the same t&c's as in the original Master Deed, Timeshare Declaration, etc docs or similar ones unless otherwise specified, but the management t&c's would become whatever is delineated in the new Management Agreement. We have that document and it's not substantially different from any that exist at other Marriott timeshares, so why is there a question of whether Marriott is entitled to enforce their typical management "style" that's indicated in the existing, current Management Agreement?

As for whether it's a good or bad thing if this situation results in GR Tahoe changing property managers, that's a matter of the individual owner's individual opinions. No doubt some want Marriott to be gone and others want Marriott to stay. For me I wouldn't say it's good or bad - it is what it is. The interest for me here is the process which I always find interesting and engage because it'll help me if ever my resorts end up in similar situations.

Whatever happens here I hope that the owners can continue to get out of their timeshares what they want.

Sue, let me expand on my comments.

When timeshares are created, the governing docs are written. They include all the "rules and regs" for the organizing firm. They grant various privileges to the founding organization. An example would be ROFR rights to the original organization. So if Marriott wrote in ROFR for a timeshare, and then later disposed of the timeshare from the Marriott system, Marriott would still own the ROFR, not the exited timeshare organization. In other words, Marriott would still have control for certain aspects of the timeshare they disposed of, should they want to exercise them. It would still be in the governing documents.

But on the other hand, an acquired existing timeshare would have a governing document with no mention of Marriott in it. If Marriott decided to drop the management agreement, all granted rights to Marriott would dissolve with the ending of the management agreement; making it much easier to make another management agreement with another timeshare group, without the baggage of overhanging Marriott rights.

This is a difference. I mentioned HGVC, because they have a long history of dealing with management agreements from external timeshares joining there "umbrella". I haven't heard of this sort of squabble with any of their affiliates. (Nor do I consider them a "Motel 6" organization.) For example, some affilates have both II and RCI access, because II access was written into the governing documents.

 

[SueDonJ]

Sue, let me expand on my comments.

When timeshares are created, the governing docs are written. They include all the "rules and regs" for the organizing firm. They grant various privileges to the founding organization. An example would be ROFR rights to the original organization. So if Marriott wrote in ROFR for a timeshare, and then later disposed of the timeshare from the Marriott system, Marriott would still own the ROFR, not the exited timeshare organization. In other words, Marriott would still have control for certain aspects of the timeshare they disposed of, should they want to exercise them. It would still be in the governing documents.

But on the other hand, an acquired existing timeshare would have a governing document with no mention of Marriott in it. If Marriott decided to drop the management agreement, all granted rights to Marriott would dissolve with the ending of the management agreement; making it much easier to make another management agreement with another timeshare group, without the baggage of overhanging Marriott rights.

This is a difference. I mentioned HGVC, because they have a long history of dealing with management agreements from external timeshares joining there "umbrella". I haven't heard of this sort of squabble with any of their affiliates. (Nor do I consider them a "Motel 6" organization.) For example, some affilates have both II and RCI access, because II access was written into the governing documents.

Well first, I wouldn't assume that what happens with HGVC resorts in any situation is what will or even might happen with Marriott resorts in similar situations. I wouldn't even assume that what happens with one Marriott resort in a given situation is what will happen in a similar situation at another Marriott resort (despite recognizing that Marriott manages properties almost uniformly across the portfolio.) That's why it's so important to obtain and review the POS for a specific resort when that resort is facing situations that are delineated in the numerous docs of that resort.

With that out of the way, and acknowledging that I'm getting into weeds here ...

Using my Barony Beach Club POS as the example relative to the ROFR issue you raised - there's a provision in the Master Deed, Article XIII Section 8, that (paraphrased) gives the Declarant (meaning the Marriott entity defined as Developer) the right to assign "any of the rights reserved under this Master Deed" to any of its "successors-in-title" or any agents, independent third parties, the Association or the Management Agent. The provision ends with, "All references to Declarant and Declarant's rights hereunder shall be deemed to include any specific assignee of Declarant." Considering that successor issues are also delineated in other docs, and considering that Marriott's ROFR t&c's are in this same governing doc as well as others, and considering that Marriott has the right to assign that right to any successors or others, I wouldn't assume that if Marriott were to sell its stake in the property it would automatically keep its right to ROFR. Would they keep it? Would they assign it to a successor, if that were a condition made by the successor? Something else that they are entitled to do with it by virtue of any other provisions in any of the other docs? I don't know but I wouldn't assume anything - I'd be looking at the new docs upon the transfer to the successor to find answers there.

Now back to GR Tahoe and looking at the Management Agreement that's included in the attachment to @davidvel's Post #80, it states in the "ASSIGNMENT AND ASSUMPTION OF AGREEMENT" dated 11/30/2001:

"WHEREAS, American Company Resort Properties, Inc., American Skiing Company, and Marriott Ownership Resorts, Inc. ("MORI") entered into that certain Purchase Agreemeat on May 2, 2001, providing for the sale of the right, title and interest in and to the fractional ownership interest of The Grand Summit Resort from American Company Resort Properties, Inc. and American Skiing Company to MORI; and ...

"WHEREAS, Assignor is assigning to Assignee, a subsidiary of MORI, all rights, duties and obligations under the terms of the Management Agreement and Assignee is assuming same; and ..."

and several other "WHEREAS" statements of a similar nature. From this we can infer that neither the original property developer/owner nor manager retained any of their rights upon the transfer, yes? Did the original "Declarant" have rights to exclude any ownership aspect (like the ROFR right you mention) and/or did the management company have a right to exclude any management aspect from the transfer? If so in either case were they given up by choice to make a clean break or because it was a Marriott demand or something else? If it were a Marriott demand and the original Master Deed-like and other governing docs include a right of the original Declarant to assign all of its rights to a successor (like the Barony docs appear to do,) can we at least infer that it's a possibility? I think so, which is why, again, it's useless to assume any answer to any of these questions is the correct answer. We need the original docs and the docs filed upon succession, and we need people who know where to look in the docs for relevant info.

If it were me facing this situation at one of my resorts and my inclination was that I'd want it to remain a Marriott-managed resort but also want the allegations against Marriott to be cleared so as to remove any lingering distrust, I'd dump the POS and the letters from Marriott and the BOD onto a lawyer's desk and say "my decision rests on what you think."

 

[Huskerpaul]

I mentioned HGVC, because they have a long history of dealing with management agreements from external timeshares joining there "umbrella". I haven't heard of this sort of squabble with any of their affiliates. (Nor do I consider them a "Motel 6" organization.) For example, some affilates have both II and RCI access, because II access was written into the governing documents.

I was in the process of buying HGVC weeks at the Coylumbridge affiliate resort in Scotland when HGVC announced they were ending their management agreement with the resort due to conflicts with the Board over HGVC's high management fees. They are now an independent and I barely avoided getting stuck with multiple weeks at a non-HGVC resort. That situation and how it was resolved seems appropriate to this discussion.

 

[travelhacker]

Well it is pretty arrogant to think that you know better than someone who has been managing commercial properties for 70 years, but I digress.

Once you drop the tin hat theories about how incompetent, greedy, and evil Marriott is it becomes pretty simple.

1. You need a spreadsheet with the number from last year and the number from this year.
2. You need the person from Marriott who approved the budget.
3. For every variance that is material the person from Marriott will know the reason for the change. If not, then I agree that they are incompetent.
4. For every variance that you don't like there are limited options based on the reason:

Mr. Marriott why did the trash budget go up 20%? Our contractor raised their price 20%.
Is there an alternative? - No. Done
Is there an alternative? - Yes. Did you bid the contract? - Yes, but our current vendor was low bid. Done
Did you bid the contract? - No. Why not? We just received the increase and will bid the contract in Q1. Done.
Did you bid the contract? - No. Why not? Corporate policy is to only bid contracts every 3 years. Can you make an exception for this? Yes. Done. Can you make an exception for this? No. Escalate to corporate.
Can you reduce service from 3x to 2x per week? No. Corporate policy requires 3x per week.
Can you make an exception for this? No. This is a brand requirement. Done.

Why did front desk charge increase by 25%? We have to pay $20/hr to staff vs. $15/hr from 18 months ago.
Is there an alternative? We have hired part time staff for busy periods but receive no resumes at lower salaries.
Can you cut staff? Yes, we can cut staff but service level will be reduced. Corporate policy requires front desk to be staffed 24 hours with 2+ people during day shifts.
Can you go below the minimum if we accept longer wait times? No. This is a brand requirement.

Etc.

2 reasonably intelligent adults can get this done in an hour or two. There are only so many material categories and only so many reasons. Everything is a matter of service level, available competition, time, or brand requirements. The BOD would quickly know if MVC was failing in their responsibility or if these are the results of limited supply in a resort area, something that they are working on that will take some time, or brand requirements that they cannot change.

The fact of the letter tells me that BOD is not being reasonable and has imposed an arbitrary standard (CPI + 1.4%) without understanding why the budget increased 19.7%. If they knew what they were doing they would say these are the things that MVC refused to consider, or they would propose reductions to the owners for services that the owners may not want - activities, coffee in the room, soap, mid week housekeeping, etc. This is not rocket science and the drama just distracts from what needs to be done.

You said so perfectly why I’ve lost faith in the board as an owner.

 

[WBP]

Well first, I wouldn't assume that what happens with HGVC resorts in any situation is what will or even might happen with Marriott resorts in similar situations. I wouldn't even assume that what happens with one Marriott resort in a given situation is what will happen in a similar situation at another Marriott resort (despite recognizing that Marriott manages properties almost uniformly across the portfolio.) That's why it's so important to obtain and review the POS for a specific resort when that resort is facing situations that are delineated in the numerous docs of that resort.

With that out of the way, and acknowledging that I'm getting into weeds here ...

Using my Barony Beach Club POS as the example relative to the ROFR issue you raised - there's a provision in the Master Deed, Article XIII Section 8, that (paraphrased) gives the Declarant (meaning the Marriott entity defined as Developer) the right to assign "any of the rights reserved under this Master Deed" to any of its "successors-in-title" or any agents, independent third parties, the Association or the Management Agent. The provision ends with, "All references to Declarant and Declarant's rights hereunder shall be deemed to include any specific assignee of Declarant." Considering that successor issues are also delineated in other docs, and considering that Marriott's ROFR t&c's are in this same governing doc as well as others, and considering that Marriott has the right to assign that right to any successors or others, I wouldn't assume that if Marriott were to sell its stake in the property it would automatically keep its right to ROFR. Would they keep it? Would they assign it to a successor, if that were a condition made by the successor? Something else that they are entitled to do with it by virtue of any other provisions in any of the other docs? I don't know but I wouldn't assume anything - I'd be looking at the new docs upon the transfer to the successor to find answers there.

Now back to GR Tahoe and looking at the Management Agreement that's included in the attachment to @davidvel's Post #80, it states in the "ASSIGNMENT AND ASSUMPTION OF AGREEMENT" dated 11/30/2001:

"WHEREAS, American Company Resort Properties, Inc., American Skiing Company, and Marriott Ownership Resorts, Inc. ("MORI") entered into that certain Purchase Agreemeat on May 2, 2001, providing for the sale of the right, title and interest in and to the fractional ownership interest of The Grand Summit Resort from American Company Resort Properties, Inc. and American Skiing Company to MORI; and ...

"WHEREAS, Assignor is assigning to Assignee, a subsidiary of MORI, all rights, duties and obligations under the terms of the Management Agreement and Assignee is assuming same; and ..."

and several other "WHEREAS" statements of a similar nature. From this we can infer that neither the original property developer/owner nor manager retained any of their rights upon the transfer, yes? Did the original "Declarant" have rights to exclude any ownership aspect (like the ROFR right you mention) and/or did the management company have a right to exclude any management aspect from the transfer? If so in either case were they given up by choice to make a clean break or because it was a Marriott demand or something else? If it were a Marriott demand and the original Master Deed-like and other governing docs include a right of the original Declarant to assign all of its rights to a successor (like the Barony docs appear to do,) can we at least infer that it's a possibility? I think so, which is why, again, it's useless to assume any answer to any of these questions is the correct answer. We need the original docs and the docs filed upon succession, and we need people who know where to look in the docs for relevant info.

If it were me facing this situation at one of my resorts and my inclination was that I'd want it to remain a Marriott-managed resort but also want the allegations against Marriott to be cleared so as to remove any lingering distrust, I'd dump the POS and the letters from Marriott and the BOD onto a lawyer's desk and say "my decision rests on what you think."

I worked for Marriott/Grande Residence Club in that 2001 era. There is no one who knows more about the governance of Grande Residence, Lake Tahoe, than the architect of that project for the American Skiing Company (Les Otten), Scott Oldakowski, who was in a leadership position with ASC, and then (and still) at MVC. Scott is an absolute consummate professional of the highest order, with high integrity.

 

[SueDonJ]

I worked for Marriott/Grande Residence Club in that 2001 era. There is no one who knows more about the governance of Grande Residence, Lake Tahoe, than the architect of that project for the American Skiing Company (Les Otten), Scott Oldakowski, who was in a leadership position with ASC, and then (and still) at MVC. Scott is an absolute consummate professional of the highest order, with high integrity.

The $10 compensation indicated in the Management Agreement transfer had me wondering if there was a Marriott connection in the original development group? But I don't know what's considered a normal compensation/buyout for those types of transfers ...

 

[daviator]

The $10 compensation indicated in the Management Agreement transfer had me wondering if there was a Marriott connection in the original development group? But I don't know what's considered a normal compensation/buyout for those types of transfers ...

It’s common to use a small dollar figure (it used to be $1, but I guess inflation has driven it up to $10) in this kind of sales contract when the entities involved don’t want the actual financial terms to be public. I’m not a lawyer, but as I understand it, contract law requires there to be “consideration” – typically money – paid for a contract to be valid, so the $10 makes it a binding contract. The parties undoubtedly have the more significant financial terms agreed on in a separate contract which isn’t public.

 

[SueDonJ]

It’s common to use a small dollar figure (it used to be $1, but I guess inflation has driven it up to $10) in this kind of sales contract when the entities involved don’t want the actual financial terms to be public. I’m not a lawyer, but as I understand it, contract law requires there to be “consideration” – typically money – paid for a contract to be valid, so the $10 makes it a binding contract. The parties undoubtedly have the more significant financial terms agreed on in a separate contract which isn’t public.

I thought maybe the big money might have been in the sale/transfer of the original developer/owner's remaining unsold intervals, entitlements and restrictions in the original docs, and rights to the common areas, et, and that the Management Agreement was sold as a separate component (because the property mgmt could theoretically be sold/transferred as a stand-alone.) Like I said, though, I have no idea how the mechanics of an existing property sale/transfer work ...

Thanks!

I'm still interested to know, after WBP's post about the sale/transfer of the property, whether there was an intent among all the parties when the property was being developed and/or when it first opened for Marriott (MORI) to assume the ownership/mgmt in short order. I think WBP is saying that the one guy, Scott Oldakowski, was with one of the founders (ASC) but then went to Marriott upon the sale/transfer?

 

[SueDonJ]

I was in the process of buying HGVC weeks at the Coylumbridge affiliate resort in Scotland when HGVC announced they were ending their management agreement with the resort due to conflicts with the Board over HGVC's high management fees. They are now an independent and I barely avoided getting stuck with multiple weeks at a non-HGVC resort. That situation and how it was resolved seems appropriate to this discussion.

As moderator I want to make clear the kind of info I'm trying to discourage in this thread. It's the repeated criticisms of Marriott that have no relevance to this discussion being made by a single poster, who's already been warned by mods/admin in multiple TUG forums to stay on topic and stop going off on the same tangent in too many unrelated threads. (And again, for anyone who's reading, problems with this moderation should be addressed by hitting the Report button on this post to bring it to the attention of the other mods and admin.)

As just another TUGger reading this thread I'm always interested in the legal discussions, but I stand by what I said about trying to assume that what happens at any other resort - Marriott or other - is what will likely happen with this situation at GR Tahoe. The letters from Marriott and the BOD are enough to know that the parties are already showing their hands.

 

[b2bailey]

I thought maybe the big money might have been in the sale/transfer of the original developer/owner's remaining unsold intervals, entitlements and restrictions in the original docs, and rights to the common areas, et, and that the Management Agreement was sold as a separate component (because the property mgmt could theoretically be sold/transferred as a stand-alone.) Like I said, though, I have no idea how the mechanics of an existing property sale/transfer work ...

Thanks!

I'm still interested to know, after WBP's post about the sale/transfer of the property, whether there was an intent among all the parties when the property was being developed and/or when it first opened for Marriott (MORI) to assume the ownership/mgmt in short order. I think WBP is saying that the one guy, Scott Oldakowski, was with one of the founders (ASC) but then went to Marriott upon the sale/transfer?

We bought our Timber Lodge week nearly 20 years ago. During the property tour I commented that it seemed odd that Marriott had developed two properties so close together. I was told that Marriott had nothing to do with developing the Grand Residence. Instead, they stepped up/in when the original developer ran into financial troubles. I would guess they paid a very low price. Would there be a recorded transaction showing those details?

 

[daviator]

We bought our Timber Lodge week nearly 20 years ago. During the property tour I commented that it seemed odd that Marriott had developed two properties so close together. I was told that Marriott had nothing to do with developing the Grand Residence. Instead, they stepped up/in when the original developer ran into financial troubles. I would guess they paid a very low price. Would there be a recorded transaction showing those details?

My guess would be that the recorded transaction would not include those details.

 

[LeslieDet]

We bought our Timber Lodge week nearly 20 years ago. During the property tour I commented that it seemed odd that Marriott had developed two properties so close together. I was told that Marriott had nothing to do with developing the Grand Residence. Instead, they stepped up/in when the original developer ran into financial troubles. I would guess they paid a very low price. Would there be a recorded transaction showing those details?

We can determine from the management agreement and the assignment agreement executed in 2001 that the developer was Heavenly Resort Properties LLC. That entity was formed in NV in May 1998 and registered to do business in CA on 7/7/98. We can determine from the management agreement that as of November 2001, Heavenly Resort Properties LLC was controlled by MORI. Thus, at some point in time between formation in 1998 and the management agreement in 2001, Heavenly Resort Properties LLC's managing member becomes MORI. Any documents detailing that shift in ownership are private, and would not be recorded anywhere because the owner/developer of the project never changed; it remained Heavenly Resort Properties LLC. Put another way, the real estate development project wasn't sold, rather the entity controlling the LLC developing the project changed.

 

[WBP]

I thought maybe the big money might have been in the sale/transfer of the original developer/owner's remaining unsold intervals, entitlements and restrictions in the original docs, and rights to the common areas, et, and that the Management Agreement was sold as a separate component (because the property mgmt could theoretically be sold/transferred as a stand-alone.) Like I said, though, I have no idea how the mechanics of an existing property sale/transfer work ...

Thanks!

I'm still interested to know, after WBP's post about the sale/transfer of the property, whether there was an intent among all the parties when the property was being developed and/or when it first opened for Marriott (MORI) to assume the ownership/mgmt in short order. I think WBP is saying that the one guy, Scott Oldakowski, was with one of the founders (ASC) but then went to Marriott upon the sale/transfer?

I wish I could say that I remember all of the circumstances arround MVC's acquisition of American Skiing Company's "Grand Summit (at Heavenly/Tahoe) Quarter Share," but, I, unfortunately don't. My apologies. You are right, Scott Oldakowski, came to MVC (from ASC) with MVC's acquisition of ASC's "Grand Summit (at Heavenly/Tahoe) Quarter Share," and has remained in a leadership position at MVC, since MVC's 2001 acquisition of an 85% stake in ASC's "Grand Summit (at Heavenly/Tahoe) Quarter Share."

I do remember the financial implosion of American Skiing Company, and with that implosion, the demise of ASC's "Grand Summit" Quarter Share product. Over the years, I chronicled a few articles on the subject, they are as follows:

Time-shares go up for sale at Heavenly-Grand Summit Hotel

American Skiing Company has begun selling time ownership for its Grand Summit quarter-share venture.Stan Hansen, Heavenly Ski Resort (which is owned by ASC) vice president, excitedly told the Douglas

www.tahoedailytribune.com

American Skiing Company: Debt and Promises - The White River Valley Herald

American Skiing Company: Debt and Promises Les Otten, who resigned last week as head of American Skiing Co., brought a burst of energy, charm, and ambition to New England skiing during the last decade. He also brought, however, a penchant for giantism and debt acquisition, and a fecklessness...

www.ourherald.com

American Skiing selling 85% stake in Tahoe hotel

The parent company of Heavenly Ski Resort is selling its 85 percent stake in the planned Grand Summit Hotel to Marriott Vacation Club International.

www.deseret.com

I'm trying to remember our Public Offering Statement, and I remember the ASC Grand Summit Public Offering Statement, and the successor MVC Grand Residence Club (at Lake Tahoe) Public Offering Statement, but, I, unfortunately don't remember the details. There were two Marriott Grand Residence Club's, one at Lake Tahoe (Heavenly), and the other at 47 Park Street, London. If my memory is right, ownership was conveyed differently at 47 Park Street, than it was at Lake Tahoe.

I wish I remembered what MVC did to the ASC Grand Summit Public Offering Statement (at Lake Tahoe), but, I just don't remember those details. I'm sure Scott does.

Grand Residence By Marriott - Home

www.grandresidenceclub.com

 

[timsi]

I wish I could say that I remember all of the circumstances arround MVC's acquisition of American Skiing Company's "Grand Summit (at Heavenly/Tahoe) Quarter Share," but, I, unfortunately don't. My apologies. You are right, Scott Oldakowski, came to MVC (from ASC) with MVC's acquisition of ASC's "Grand Summit (at Heavenly/Tahoe) Quarter Share," and has remained in a leadership position at MVC, since MVC's 2001 acquisition of an 85% stake in ASC's "Grand Summit (at Heavenly/Tahoe) Quarter Share."

I do remember the financial implosion of American Skiing Company, and with that implosion, the demise of ASC's "Grand Summit" Quarter Share product. Over the years, I chronicled a few articles on the subject, they are as follows:

Time-shares go up for sale at Heavenly-Grand Summit Hotel

American Skiing Company has begun selling time ownership for its Grand Summit quarter-share venture.Stan Hansen, Heavenly Ski Resort (which is owned by ASC) vice president, excitedly told the Douglas

www.tahoedailytribune.com

American Skiing Company: Debt and Promises - The White River Valley Herald

American Skiing Company: Debt and Promises Les Otten, who resigned last week as head of American Skiing Co., brought a burst of energy, charm, and ambition to New England skiing during the last decade. He also brought, however, a penchant for giantism and debt acquisition, and a fecklessness...

www.ourherald.com

American Skiing selling 85% stake in Tahoe hotel

The parent company of Heavenly Ski Resort is selling its 85 percent stake in the planned Grand Summit Hotel to Marriott Vacation Club International.

www.deseret.com

I'm trying to remember our Public Offering Statement, and I remember the ASC Grand Summit Public Offering Statement, and the successor MVC Grand Residence Club (at Lake Tahoe) Public Offering Statement, but, I, unfortunately don't remember the details. There were two Marriott Grand Residence Club's, one at Lake Tahoe (Heavenly), and the other at 47 Park Street, London. If my memory is right, ownership was conveyed differently at 47 Park Street, than it was at Lake Tahoe.

I wish I remembered what MVC did to the ASC Grand Summit Public Offering Statement (at Lake Tahoe), but, I just don't remember those details. I'm sure Scott does.

Grand Residence By Marriott - Home

www.grandresidenceclub.com

You've mentioned him twice now, but it's important to remember that he's currently the VP of Sales in Orlando so more relevant in that capacity. It's unlikely he would have more detailed knowledge about the legal documents than the legal teams on both sides who I presume have full access to them. However, Mr. Oldakowski could be a valuable resource for us to understand their current sales practices.

 

[WBP]

You've mentioned him twice now, but it's important to remember that he's currently the VP of Sales in Orlando so more relevant in that capacity. It's unlikely he would have more detailed knowledge about the legal documents than the legal teams on both sides who I presume have full access to them. However, Mr. Oldakowski could be a valuable resource for us to understand their current sales practices.

I can assure you, having worked with Scott for many years, Scott knows far more about this subject than you speculate. He was an architect of the ASC Grand Summit “product,” not just a sales guy, or sales leader, and he GUIDED the Grand Summit product, into the Grand Residence product through the product development continuum.

Scott was Les Otten’s right hand person for the development/evolution of the Grand Summit product, and assumed far more than a sales role at MVC (in their “fractonal” product line (e.g. Grand Residence, The Ritz-Carlton Club)) leadership, for many years.

PS: I'm forever amazed by what some of the characters on TUG pretend to know, of their avocation, not vocation, and who lack a RRP designation to validate their knowledge of the resort ownership industry.

 

[ocdb8r]

Have there been any developments on this? I've heard nothing but crickets....

 

[LeslieDet]

Have there been any developments on this? I've heard nothing but crickets....

Did you attend the January HOA meeting for the update?

 

[igopogo]

I attended. Not much was said except that they are meeting about the issue. Even that was at the end of the call when an owner asked about it. I couldn’t get a sense of whether progress is being made.

The legal dispute is still alive, and the attorney for the association seemed to imply that they were about to declare an impasse and at that point would go to court.

 

[BigDawgTUG]

Just received this. Glad to see they are at least having conversations on the issue. If a fair representation of their conversations, it looks like they are now only about $400K to $500K apart. According to the Board, the Manager’s position is that the 2024 Budget approved by the Board is at least $739,000 less than what the Manager says is necessary to meet the needs of the GRC (guess that means the remaining $800K sought by the Manager was not necessary to preserve the brand and was for what??), and the Board says it is willing to increase the budget by an additional $300K (plus potentially look for additional revenue streams to close the gap).

01-29-24 Dear Fellow GRC Owners: The GRC Board Team met with the Marriott Senior Executive Management Team on January 24, 2024, to discuss details relating to the Board-approved 2024 Budget. This meeting had been requested by the Marriott Senior Management Team and agreed to by the GRC Board. The meeting was held at the GRC. By way of background, in September 2023, the Manager had proposed a 19.7% year-over-year increase in the amount of $12,035,524 for the 2024 budget. After review and deliberation, the Board approved a 5.26% year-over-year increase in the operating expenses. The total amount of the approved 2024 Budget is $10,539,378. The Manager’s position is that the 2024 Budget approved by the Board is at least $739,000 less than what the Manager says is necessary to meet the needs of the GRC. The Board disagrees and thinks the 2024 approved Budget ($10,539,378) is sufficient to meet the needs of the GRC. The primary purpose of the January 24 meeting was to discuss the Board’s and Manager’s respective positions and try to reach a resolution. Unfortunately, the meeting did not resolve the disagreement as to the adequacy of the 2024 Budget. The Board’s position is that the Manager can and should further reduce controllable costs, including labor, while the Manager’s position is that it cannot reduce those costs without adversely impacting the Marriott “brand standard.” At least two options were discussed, including a proposal by the Board to increase the 2024 Budget by as much as $300,000. The BOD offered the additional funds to maintain owner expectations and to maintain the brand standard. However, no consensus was reached, and at the conclusion of the meeting, the Board requested that the Manager prepare another proposal for consideration that addresses the Board’s concerns about labor costs considering the Board’s willingness to increase the 2024 Budget by three hundred thousand dollars. Considering these shortfalls, the BOD is also actively researching opportunities to create additional revenue streams that will help address the budget deficit. We are currently waiting for the Manager to make their proposal. We hope to be able to provide additional information and further updates in the coming weeks. Regards, The GRCLT Condominium Inc. Board of Directors

 

[travelhacker]

Just received this. Glad to see they are at least having conversations on the issue. If a fair representation of their conversations, it looks like they are now only about $400K to $500K apart. According to the Board, the Manager’s position is that the 2024 Budget approved by the Board is at least $739,000 less than what the Manager says is necessary to meet the needs of the GRC (guess that means the remaining $800K sought by the Manager was not necessary to preserve the brand and was for what??), and the Board says it is willing to increase the budget by an additional $300K (plus potentially look for additional revenue streams to close the gap).

01-29-24 Dear Fellow GRC Owners: The GRC Board Team met with the Marriott Senior Executive Management Team on January 24, 2024, to discuss details relating to the Board-approved 2024 Budget. This meeting had been requested by the Marriott Senior Management Team and agreed to by the GRC Board. The meeting was held at the GRC. By way of background, in September 2023, the Manager had proposed a 19.7% year-over-year increase in the amount of $12,035,524 for the 2024 budget. After review and deliberation, the Board approved a 5.26% year-over-year increase in the operating expenses. The total amount of the approved 2024 Budget is $10,539,378. The Manager’s position is that the 2024 Budget approved by the Board is at least $739,000 less than what the Manager says is necessary to meet the needs of the GRC. The Board disagrees and thinks the 2024 approved Budget ($10,539,378) is sufficient to meet the needs of the GRC. The primary purpose of the January 24 meeting was to discuss the Board’s and Manager’s respective positions and try to reach a resolution. Unfortunately, the meeting did not resolve the disagreement as to the adequacy of the 2024 Budget. The Board’s position is that the Manager can and should further reduce controllable costs, including labor, while the Manager’s position is that it cannot reduce those costs without adversely impacting the Marriott “brand standard.” At least two options were discussed, including a proposal by the Board to increase the 2024 Budget by as much as $300,000. The BOD offered the additional funds to maintain owner expectations and to maintain the brand standard. However, no consensus was reached, and at the conclusion of the meeting, the Board requested that the Manager prepare another proposal for consideration that addresses the Board’s concerns about labor costs considering the Board’s willingness to increase the 2024 Budget by three hundred thousand dollars. Considering these shortfalls, the BOD is also actively researching opportunities to create additional revenue streams that will help address the budget deficit. We are currently waiting for the Manager to make their proposal. We hope to be able to provide additional information and further updates in the coming weeks. Regards, The GRCLT Condominium Inc. Board of Directors

I am pleased that this sounds like it was at least a productive meeting.

I'm not sure why the line in the sand was drawn at $300,000. I don't want the fees to go up, but the affiliation with Marriott is very valuable to me as an owner, and I hope that Marriott can present hard data as to why they need more than $300K, and the board can be open minded.

I'm not sure why labor costs seem to be such a sticking point. It's easy to see that those costs have gone up dramatically over the past 3-4 years.

 

[ocdb8r]

Agreed. I am glad there is some engagement continuing and it seems like the Board has honed in on a specific area they'd like to see cost improvement that is actually in the control of management. However, I have no idea if reducing "labor" costs by the amount necessary is doable. Labor isn't it's own line item and clearly makes up part of things like Front Desk, Housekeeping...etc. Very hard for the average owner to discern if reasonable cuts can be made while the resort is maintained to a good standard.

A bit concerned in their own letter the Board points out the meeting was requested by MVC and "agreed to" by the Board. They seem to be taking the position this isn't their problem to resolve; they've approved a budget and MVC will have to live with it...

 

[Dean]

A bit concerned in their own letter the Board points out the meeting was requested by MVC and "agreed to" by the Board. They seem to be taking the position this isn't their problem to resolve; they've approved a budget and MVC will have to live with it...

This was my thought as well plus even if a compromise is reached, the relationship is clearly strained sufficient that it will be difficult for both groups to continue working together long term with the current players. Cutting costs by reducing employees or hours will likely impact guest's experience there. One has to wonder whether there are those on the board who would be just as happy, if not happier, changing management companies.

 

[igopogo]

One has to wonder whether there are those on the board who would be just as happy, if not happier, changing management

My thought also.

Unless there’s a room somewhere in the resort with a bunch of people twiddling their thumbs, it’s hard to see where they would cut labor significantly. The front desk generally has one to two employees except at peak times, when staffing seems reasonable. They’ve already all but done away with groundskeeping and activities. Perhaps they are looking at some corporate allocated labor?

One interesting eye-opener for me is that MVC gets much more than their ten percent. Who do we pay for insurance? Marriott insurance services. For updates? Marriott renovation services. In a big company it does make sense to take advantage of economies of scale like this…but when dealing with separate associations there is a conflict of interest and shell game opportunities abound.

Anyway, I am happy to see some movement, and I’m betting the management company has built in some room to move as well.

 

[Dean]

My thought also.

Unless there’s a room somewhere in the resort with a bunch of people twiddling their thumbs, it’s hard to see where they would cut labor significantly. The front desk generally has one to two employees except at peak times, when staffing seems reasonable. They’ve already all but done away with groundskeeping and activities. Perhaps they are looking at some corporate allocated labor?

One interesting eye-opener for me is that MVC gets much more than their ten percent. Who do we pay for insurance? Marriott insurance services. For updates? Marriott renovation services. In a big company it does make sense to take advantage of economies of scale like this…but when dealing with separate associations there is a conflict of interest and shell game opportunities abound.

Anyway, I am happy to see some movement, and I’m betting the management company has built in some room to move as well.

I wonder what options were offered by MVC at the meeting. I also wonder how many MVC people were at the meeting who are not already on site, more people = more commitment. At least MVC didn't just give them a take it or leave it ultimatum. The fact MVC asked for the meeting speaks somewhat to their commitment and hopefully some willingness to work with the BOD. The original approved budget increase did appear unrealistic given what we're seeing in other areas and at other resorts. To a degree this issue impacts all of us but it hits much more at home for some here and others who own there and care about exchanging/Abound.