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

[wuv pooh]

Is this a tongue in cheek comment or is it truly that Marriott has no money for snow removal for the year and as a result, snow won't be removed?

/s = sarcasm in internet speak

 

[ocdb8r]

So an update from the BOD dated Jan 29 was posted to this thread in Post #495 and since then there's been no information directly from the Management Company as to its positions during that meeting or after, yes? Did we learn nothing in the first twenty or so pages of this thread about the folly of taking this particular BOD's words at face value?!

And I'll say again for anyone who thinks the question of Marriott possibly severing its Management Agreement with this resort is no longer on the table, at the several resorts where this type of negotiating happened (regardless of the outcome) the history shows that it's a long process with extensive posturing and communication. Specifically, in none of the instances would it have been said after all was said and done that Marriott was simply "bluffing." I don't think anybody can come away at this point with a definitive expectation of it happening or not at this resort, especially with only the one-sided limited perspective we're currently enjoying.

I appreciate that GR Tahoe owners are willing to share here whatever info they've been given - thank you!

Any updates or further reports? We were in the closing process to sell our unit when this all emerged (kind of glad we got out when we did) so I haven't seen anything myself. Curious how/if it was all resolved.

 

[igopogo]

Any updates or further reports? We were in the closing process to sell our unit when this all emerged (kind of glad we got out when we did) so I haven't seen anything myself. Curious how/if it was all resolved.

No news. There’s a board meeting this week, though I doubt they will discuss that.

 

[igopogo]

I missed the very first part of the meeting yesterday, but it sounds like there is some kind of settlement agreement between the board and MVC. I’m assuming this relates to the dispute over prior foreclosures of some units, which from the board’s side seemed to be the major bone of contention. The board had implied in the past that cleaning up the dispute would also remedy the short term cash issues.

There was an air of cooperation overall.

 

[Likes to Travel]

I missed the very first part of the meeting yesterday, but it sounds like there is some kind of settlement agreement between the board and MVC. I’m assuming this relates to the dispute over prior foreclosures of some units, which from the board’s side seemed to be the major bone of contention. The board had implied in the past that cleaning up the dispute would also remedy the short term cash issues.

There was an air of cooperation overall.

Thank you igopogo. This is nice to hear!

 

[timsi]

Oh, so Marriott didn't quite wipe the floors with the HOA as some anticipated? What a surprise!

 

[davidvel]

Oh, so Marriott didn't quite wipe the floors with the HOA as some anticipated? What a surprise!

I don't think we know.

 

[dioxide45]

I missed the very first part of the meeting yesterday, but it sounds like there is some kind of settlement agreement between the board and MVC. I’m assuming this relates to the dispute over prior foreclosures of some units, which from the board’s side seemed to be the major bone of contention. The board had implied in the past that cleaning up the dispute would also remedy the short term cash issues.

There was an air of cooperation overall.

If I am interpreting this correctly, I am not sure it is a good idea for an HOA to rely on the sales of foreclosures to make up for shortages in maintenance fee and reserve funding. Doesn't really seem all that sustainable.

 

[davidvel]

If I am interpreting this correctly, I am not sure it is a good idea for an HOA to rely on the sales of foreclosures to make up for shortages in maintenance fee and reserve funding. Doesn't really seem all that sustainable.

I agree. But if the money belongs to it (I don't know), it should be incorporated into the budget. There are no details of any agreement, and I doubt we will ever see it unless a further dispute arises.

 

[timsi]

I don't think we know.

Marriott's position appeared rigid, suggesting that not a single cent could be trimmed from the proposed budget and that the HOA wasn't entitled to additional funds from the proceeds of foreclosed units (likely derived from rental income and sales). Both the official and unofficial message were clear: either the HOA accepted, or they would relinquish management of the resort, withdrawing it from Abound. Some here embraced or even advocated this position.

I was skeptical that this was going to happen. Firstly, Marriott likely owns a substantial number of units. Consequently, it's in their best interest to oversee inventory management and keep the resort in Abound, as rental operations run more smoothly under this arrangement, to put it mildly. Equally important, a new management company can potentially expose operational and inventory practices—something Marriott vehemently opposes. Other HOA may start to ask more questions about some of these practices. Abandoning management would mean a loss of income.

Considering these factors, I said that such an outcome was improbable. Where are we now? An atmosphere of settlement and cooperation hints at Marriott relenting from its rigid position. I anticipate that some of the terms of the settlement will eventually surface, as certain financial details cannot be entirely shielded from owners, either through regular meeting minutes or auditor's reports.

The proceeds from the sales can be substantial and ongoing, making it likely worthwhile for the HOA to have gone through this process.

 

[vikingsholm]

If true that an agreement has been reached, it's nice to see that an HOA can stand up for its owners and a quality company like Marriott can both be reasonable enough to compromise in some ways for the interest of all. Too much of today's society seems to revolve around taking harsh stances and giving no quarter to the other side.

 

[davidvel]

Marriott's position appeared rigid, suggesting that not a single cent could be trimmed from the proposed budget and that the HOA wasn't entitled to additional funds from the proceeds of foreclosed units (likely derived from rental income and sales). Both the official and unofficial message were clear: either the HOA accepted, or they would relinquish management of the resort, withdrawing it from Abound. Some here embraced or even advocated this position.

I was skeptical that this was going to happen. Firstly, Marriott likely owns a substantial number of units. Consequently, it's in their best interest to oversee inventory management and keep the resort in Abound, as rental operations run more smoothly under this arrangement, to put it mildly. Equally important, a new management company can potentially expose operational and inventory practices—something Marriott vehemently opposes. Other HOA may start to ask more questions about some of these practices. Abandoning management would mean a loss of income.

Considering these factors, I said that such an outcome was improbable. Where are we now? An atmosphere of settlement and cooperation hints at Marriott relenting from its rigid position. I anticipate that some of the terms of the settlement will eventually surface, as certain fsinancial details cannot be entirely shielded from owners, either through regular meeting minutes or auditor's reports.

The proceeds from the sales can be substantial and ongoing, making it likely worthwhile for the HOA to have gone through this process.

You originally stated the below which I was responding to. Both sides were blaming the other. We still don't know whether either side capitulated, or who got "wiped" if at all. As I stated, we just don't know, and pure speculation is that we never will.

Oh, so Marriott didn't quite wipe the floors with the HOA as some anticipated? What a surprise!

 

[davidvel]

If true that an agreement has been reached, it's nice to see that an HOA can stand up for its owners and a quality company like Marriott can both be reasonable enough to compromise in some ways for the interest of all. Too much of today's society seems to revolve around taking harsh stances and giving no quarter to the other side.

How do we know that MVC was reasonable and compromised? How do we know that the HOA accomplished what they sought?

 

[vikingsholm]

How do we know that MVC was reasonable and compromised? How do we know that the HOA accomplished what they sought?

Don't know the details, but as I said, IF TRUE...

Certainly sounds better than where they were at some months ago. I'd not feel the same way if I were still hearing bad vibes coming off of either side, but it's been relatively quiet. I am not going to assume that one side totally folded, but that both came to the table and gave a little. Hope to hear more to confirm this, and there's always a possibility we don't know enough and that it wasn't a good deal.

 

[davidvel]

Don't know the details, but as I said, IF TRUE...

Certainly sounds better than where they were at some months ago. I'd not feel the same way if I were still hearing bad vibes coming off of either side, but it's been relatively quiet. I am not going to assume that one side totally folded, but that both came to the table and gave a little. Hope to hear more to confirm this, and there's always a possibility we don't know enough and that it wasn't a good deal.

That was my only point. We have received some information that one person here thinks an agreement may have been reached and in part resolved claims relating to foreclosed timeshares. It is a big leap from there to assume that MVC was reasonable and compromised to the benefit of all. If you have any inside info that would be great but it seems at this point we don't really know any facts at all, just opinions and speculation.

 

[Dean]

Marriott's position appeared rigid, suggesting that not a single cent could be trimmed from the proposed budget and that the HOA wasn't entitled to additional funds from the proceeds of foreclosed units (likely derived from rental income and sales). Both the official and unofficial message were clear: either the HOA accepted, or they would relinquish management of the resort, withdrawing it from Abound. Some here embraced or even advocated this position.

I was skeptical that this was going to happen. Firstly, Marriott likely owns a substantial number of units. Consequently, it's in their best interest to oversee inventory management and keep the resort in Abound, as rental operations run more smoothly under this arrangement, to put it mildly. Equally important, a new management company can potentially expose operational and inventory practices—something Marriott vehemently opposes. Other HOA may start to ask more questions about some of these practices. Abandoning management would mean a loss of income.

Considering these factors, I said that such an outcome was improbable. Where are we now? An atmosphere of settlement and cooperation hints at Marriott relenting from its rigid position. I anticipate that some of the terms of the settlement will eventually surface, as certain financial details cannot be entirely shielded from owners, either through regular meeting minutes or auditor's reports.

The proceeds from the sales can be substantial and ongoing, making it likely worthwhile for the HOA to have gone through this process.

As noted, we don't know the specifics of the outcome. Both sides seemed rigid but I'd remind you that Marriott did adjust their budget significantly but with reduction of personal/services possibly involved. Hopefully they got close enough that both sides are OK but as a minimum this is going to be a strained relationship going forward. I think owners there can expect some even heftier fee increases over the next couple of years compared to other properties.

 

[Likes to Travel]

Email below from the BOD

Dear Fellow Marriott Grand Residence Club Owners,

As you know, your Board of Directors has worked diligently over the last year to reach a legal settlement with our Manager (i.e., Marriott Resorts Hospitality Corporation). You may recall that in November 2023, on behalf of the Association, we commenced legal proceedings against Marriott in connection with the overspending of the Board-approved budgets for 2022 and 2023, which in the aggregate exceeded $800,000. During this same timeframe, the Board was evaluating claims against Marriott for the mishandling and improper foreclosure of at least six GRC fractional interests that have been transferred to the Association. We calculated this loss to be in excess of $500,000. After months of negotiation with Marriott’s legal team, we agreed to a settlement amount of $1,265,270 for the budget litigation and the foreclosed fractional interest dispute.
The vote on whether to accept the settlement was not an easy decision for the Board. On the negative side, Marriott required as a condition of the settlement that the Board revise the 2024 budget by approximately $944,000 (to be mostly funded by the settlement proceeds), resulting in approximately a 19% year-over-year increase instead of a 5.7% year-over-year increase as originally approved by the Board. Much of the increase to the revised 2024 budget was due to unprecedented increases in insurance premiums and utility costs. In an attempt to help offset these increases, the Board had proposed some modest departmental labor-related budget reductions to the Manager, but Marriott would not agree to any of those proposed reductions.
Going forward there is concern that the Manager may insist on further double-digit year-over-year maintenance fee increases as a condition to the continued use of the “Marriott” brand. State law and the Association’s governing documents require that any increase greater than 20% would require a vote by the owners.
There is further concern that substantially higher maintenance fees may force out long-time legacy owners who can no longer afford to pay them. In addition, because Marriott’s management fee is 10% of the annual budget, higher maintenance fees increase the amount of Marriott’s management fee.
As your Board, we have worked tirelessly on behalf of all owners to pursue reasonable across-the-board budget reductions in an attempt to keep maintenance fees reasonable. However, our Marriott-affiliated Manager claims that any reductions in certain operational expenses would cause the Grand Residence Club to fall below the “Marriott brand standard.”
To help offset the increased maintenance fees, the Board has been exploring potential new revenue streams. For example, we have been working with our Manager on a destination or resort fee for outside renters only (not owners), but due to Marriott’s rules, this does not look promising. On the positive side, we have raised the PMPE (a fee renters pay for preventative maintenance) from 6% to 10% to help offset the annual maintenance fees we all pay. The Board wants to hear from you on these important issues. For example, would you be willing to pay higher maintenance fees in the future to maintain the Marriott Brand standard, or would you rather see the Manager reduce some of its services to keep your maintenance fees at an inflationary increase and consistent with historical practice? Or, for example, would you like the Board to evaluate whether lower maintenance fees might be available if the Association were to retain a different management company (e.g., Hilton, Lake Tahoe Vacation Club, Embassy Suites, Wyndham, etc.)?

We care deeply about your ability as members to affordably maintain your ownership, and we are doing everything in our power to represent your interests.
Please take a few minutes to fill out our owner survey to help us better understand the direction you would like to see the GRC take in years to come.

The GRC BOD

 

[dioxide45]

What questions does the owner survey include? Perhaps someone taking the survey can capture the questions along the way to post them here?

 

[Likes to Travel]

*** GRC Owner Survey ***​ * Would you be willing to pay higher maintenance fees to maintain the Marriott brand standard? Yes, I want to pay higher annual maintenance fees year over year to maintain the Marriott brand standard. No. I would like to see budget reductions to help keep my maintenance fees lower and consistent with historical practices. Other​ * Would you like the BOD to explore hiring a different management company (Hilton, Lake Tahoe Vacation Club, Embassy Suites, Wyndom), to evaluate if lower maintenance are available? Yes, I would like the BOD to explore other management options to maintain the value of my property and keep maintenance fees at a reasonable rate No, I do not want the board to explore different management options Other​ * Would you like Marriott to make budget cuts, and a reduction in services to keep maintenance fees lower? Yes, I would like to see the management company make budget cuts No, I do not want the management company to make budget cuts​ What services and activities would you be willing to give up to keep maintenance fees lower? Refreshements in the lobby Valet bingo Wine Tasting Crafts Fitness Classes Guided hikes Karaoke Mid-week Tidy Other​

Submit Survey​

 

[Eric B]

* Would you like the BOD to explore hiring a different management company (Hilton, Lake Tahoe Vacation Club, Embassy Suites, Wyndom), to evaluate if lower maintenance are available?

The spelling of "Wyndham" makes me wonder about the situational awareness the BOD has regarding the timeshare industry. Also, what would the difference between Embassy Suites and Hilton be? Embassy Suites is a hotel brand owned by Hilton while Hilton could be HGVC.

 

[dioxide45]

The spelling of "Wyndham" makes me wonder about the situational awareness the BOD has regarding the timeshare industry. Also, what would the difference between Embassy Suites and Hilton be? Embassy Suites is a hotel brand owned by Hilton while Hilton could be HGVC.

Yeah, I was reading some of the same things. The BOD doesn't seem to really seem to have done a lot of research into possible management companies. Embassy was an old timeshare brand where many of the different resorts went different ways. Some are under Diamond and I think some are even now under Westgate. I believe Point at Poipu was a previous Embassy timeshare.

Based on the wording of the questions how the BOD would like people to answer.

Of the activities, valet and mid-week tidy are probably the two that would save them the most. I doubt any of the others would even make a dent in the overall budget.

 

[Likes to Travel]

Just my opinion...
First, I think the BOD has done their duty by trying to maximize every dollar and I appreciate them. Secondly, with all the inflation the last few years, dues will have to go up. I'm a small business owner and everything has gone way up in costs. I'm sure the costs for the GRC and the management company have also gone up a bunch. I feel like the BOD has realized this because the BOD agreed to the settlement money going to pay the 2024 dues. They even mention the costs of insurance and utilities going way up in their email. I would rather raise dues than drop below the Marriott standard or lose the Marriott name and connection. Third, I feel changing to a different management company/hotel name would only lessen the value of the owner's timeshare especially if they try and sell it or rent it. Fourth, all other management companies are dealing with the same cost increases and I don't feel there would be much difference in what would be required as dues especially if you calculate the cost of losing the Marriott name and connection. Fifth, there isn't much left you can cut that would make much of a difference to keep the dues lower. Sixth, I think raising the dues is inevitable but maximizing each dollar is the best path is forward.
Just an opinion...

 

[Ken555]

I believe that this letter and survey show that the board hesitates to invest more effort into the HOA without clear direction from the owners. If the board thinks they could find a comparable, cheaper alternative for management, they should go ahead and get quotes from other vendors and present those options to the owners. I understand that getting these quotes will be a lengthy and complex process. Furthermore, any change from Marriott will significantly affect how many owners use their weeks, as I believe many owners trade one or more weeks each year with other Marriott properties.

However, since the HOA must pay its utilities, I'm still somewhat baffled by how the board earlier thought it could somehow simply decide not to pay the true cost of those expenses. And those costs won't change with a different Management company.

 

[Dean]

It would seem that most of the things on the list to be considered for removal should be removed anyway, at least in this climate. The good news is that inflation looks to have subsided and to be pulling back somewhat though one of the ways resorts have to get around a yearly limit is to spread an increase over more than one year and this could be in the works here.

 

[bizaro86]

It would seem that most of the things on the list to be considered for removal should be removed anyway, at least in this climate. The good news is that inflation looks to have subsided and to be pulling back somewhat though one of the ways resorts have to get around a yearly limit is to spread an increase over more than one year and this could be in the works here.

That's going to be a very large effective increase next year though. Owners didn't pay the full increase this year because of the settlement, if they raise another 10%+ next year and owners pay all of this year's increase as well that's going to be a huge jump.