What is going on w/these MF's??

[Beverley]

Has anyone seen their Aruba Surf Club fees for 2009?

I just saw mine and they went up almost $300. :annoyed: No mention of Special Assessment just a huge rate hike. What could possibly justify such a increase? Over the last 3 years fees at this resort went up approximately $100 or less.

Thoughts anyone?

Beverley

 

[iamnotshopgirl]

I just checked my gold weeks. The reserve fee stayed the same as last year. The 2008 operating fee was $911.28. An increase of 20% in the Operating Fee for 2009?:annoyed: I am going to do a little research on the 2009 operating budget to try to figure out why such a large increase. It all can't be the price of utilities (electric). Maybe there will be a letter forthcoming from the HOC explaining the increase. If there is any good news in this there is no assessment and no increase in the reserve fee.



2009 Reserve Fee 2009-01-16 147.73
2009 Operating Fee 2009-01-16 1095.87
Total Charges $1243.60



bob

 

[kjd]

high maintenance fees?

Maintenance fees are high, especially given the current economic situation. They will probably be even higher next year.

While not referring to any individual Marriott TS I believe that maintenance fees in general are still reasonable. Most people recognize that when a developer sells out a project the mf will rise out of proportion to the increase in yearly costs. It is not uncommon for a developer, or in this case Marriott, to partially subsidize mf in order to sell the units to new buyers. When the developer leaves, so does the subsidy.

Older Marriott properties often require more maintenance and replacement. For those of us owners who use Marriott ts every year maintenance issues are a key part of an enjoyable vacation. The Marriott brand has a certain standard of quality that is generally above most ts. The worst thing would be for Marriott to adopt a deferred maintenance program in order to please people who squawk about high maintenance fees.

It's another matter if one does not use their ts or if they cannot afford to pay the annual costs. Those folks should sell. Maybe that's whats happening on e Bay.

The alternatives to ts ownership are renting, staying home or staying in a hotel. There is no guarantee that the costs of these options will not rise. In fact, most Marriott hotel rooms are now between $100 and $250 per night. A time share is a much different experience (and better) than a hotel room for a week or two. We should keep that in mind.

 

[Dave M]

Most people recognize that when a developer sells out a project the mf will rise out of proportion to the increase in yearly costs.

That's not true, at least for Marriott resorts.

From 2001 through 2008, the average annual increase in fees (excluding special assessments) at Marriott resorts was 5.2% and the median increase was 5.0%. During that same period, the average and median increases in years when Marriott's subsidy was eliminated were not far off of those percentages. Of the 13 Marriott resorts where the subsidy ended since 2001, only two had double-digit fee increases in the first non-subsidy year. And, as we all painfully know, double-digit increases are not at all unusual - even without subsidy considerations! One resort (Newport Coast) had its fees go down in its first non-subsidy year (2004). The same thing happened at some other resorts (e.g., Custom House) where the subsidy was eliminated prior to the years covered by the database.

The historical fee database is available for all to see - either through the FAQs for this Marriott forum or the Marriott section of TUG Advice (link at the top of this page).

It is not uncommon for a developer, or in this case Marriott, to partially subsidize mf in order to sell the units to new buyers. When the developer leaves, so does the subsidy.

Yes, developers often do subsidize MFs in the early years. They have to. In a ridiculous example, imagine the fees at a resort that has sold only one week so far, if there weren't a subsidy. The fees for that one owner could be in the $$ millions! The purpose of a subsidy (at least at Marriott resorts) is to keep MFs at a level such that "normal" increases can be implemented during the sales period or at least until there are enough owners so that the HOA is self-sustaining without any developer subsidy. If Marriott guesses perfectly before construction begins - something that's almost impossible to do - the increase in the first non-subsidy year will match the typical percentage increases of the years when the subsidy was in place.

Looked at another way, if Marriott's track record was typically for a double-digit increase in fees in the first non-subsidy year, the database would show it and there would be numerous warnings about such shenanigans in this forum.

 

[kjd]

Thanks Dave, I stand corrected about Marriott's maintenance fees but I am very doubtful that other ts companies are acting in a similar fashion. In fact, when I hear that a mf on new two bedroom units are far less than what Marriott's charging, it makes me wonder how these companies do it.

The jist of my post was not that issue but rather the idea that Marriott's mf are in general, reasonable. What is your opinion? Do you think Marriott's mf are reasonable and justifiable?

On another matter I recently read somewhere that the timeshare division of Marriott owns only a few of the properties they sell and manage. Does anyone know the properties that are Marriott wholley owned and the significance of non-ownership? What affect does it have on us Marriott timeshare owners? Maybe it dosen't matter.

 

[Dave M]

MVCI (or a related company in the case of most non-U.S. Marriott timeshares) owns, manages and sells weeks at all of the Marriott timeshare resorts.

It's the Marriott hotels (including Courtyard, Residence Inn, Fairfield Inn, etc.) that Marriott owns very few of. Almost all of those are owned by individuals or entities that are unrelated to Marriott by ownership. Those owners have franchises to operate the various hotels under the Marriott name in the same manner that owners of Burger King, McDonalds and other franchises operate.

Whether Marriott MFs are reasonable is in the eye of the beholder. For me, at the resorts I own, I believe the fees are reasonable for the vacation experiences (occupying and strength of exchanges) that I enjoy. There's no question that not all would agree!

 

[Beverley]

For the most part I find the Marriott MF's to be reasonable also. However, I am also seeing they are rising more rapidly at some resorts and yet others are able to keep a stable MF increase.

While not complaining, mind you, I own 8 weeks and when they start coming in at $200 and $300 increases (or special assessments) it does add up and I frankly question the need for sharp increases. I have always questioned the need for special assessments.

My feeling is and always has been that if the fee structure is done right, the only reason for a special assessment would be in the case of an extreme and unpredictable event, such as the devastation of some of the Florida hurricanes. The insurance deductibles can justify a couple of hundred dollars per owner.

I think even "upgrades" are a "planable" item and should be eased into the reserves such that sharp increases or special assessments are not imposed. Just "my humble opinion".

Thanks for all the replys and the analysis on the operation budget.

Beverley

 

[ilene13]

the assessment is for the Ocean Club, not the surf club.

 

[ilene13]

Look at the tread about Marriott owners being ripped off.

 

[Beverley]

the assessment is for the Ocean Club, not the surf club.

You are right. My comments are about special assessments in general. I have had them for a couple of my other resorts. Haven't had them yet for the Surf Club. I did read the thread for the Ocean Club and sympathize with Ocean Club owners.

Best

Beverley

 

[davis6]

I just received the the report on the MF costs on NCV and I am not sure that they do a proper price comparison on the repairs that need be.

I own a business that deals with a couple of the issues and I am anxious to become a vendor at the prices they are paying. Is there a requirement to get a few bids? I know there is a management company but are they required to submit 2-3 bids? It is the only right way. Have you heard of kick backs? They are real.

 

[Beverley]

Although I do not know from any personal experience, I seem to recall some of the talk about Streamside back in the day when part of the 5 buildings were upset with Marriott for some repairs/ work/ renovations. One of the complaints was that Marriott had their own list of vendors they choose to use. They do not "go out to bid" when renovations or upgrades are being considered. Some thought this was at higher than necessary prices/ costs.

I hear what you are saying.

Beverley

 

[iamnotshopgirl]

I went online to the Marriott owners site to see if the 2009 budget or letter from the HOC president were available. They were not posted at this time. However, I re-read the Spring 2008 letter from the HOC president which is available online and except for the upgrades mentioned I believe the letter could explain the operating fee increase. The letter identifies some of the issues concerning day to day operations such as the cost of labor, utilities and the cost of importing goods and services. All have risen in cost. The letter also states the following:

"Your Board is cognizant of the impact that these factors have on your maintenance fee
and it is our objective to ensure that the operation of the resort is to the standards in
keeping with all Marriott Vacation Club® International resorts. Likewise, we intend to
fully-fund the capital reserves so that all renovations and replacements can be paid from
available cash on hand, eliminating the need for special assessments of the membership."

I received the name of the new GM of Surf Club from a fellow tugger in another post. I emailed him this morning basically asking him to confirm what I think is the reason (2008 Spring Letter) for the increase in the operating fee. Also, I asked him to give me a breif update as to the status of the air conditioning system. Repeated failures over the years since buildings were opened it was supose to have been repaired but as another post mentioned it has again failed. I do not want this to be an albatross, like the roof at the Ocean Club, in subsequent years where the owners would financially be on the hook with assessments to fix the problem which should have already been addressed.

IMHO The Board of the Surf Club and Marriott are acting in the best interest of the owners. By maintaining the reserve fee should negate the need for any assessments in the future. There was no increase in the reserve fee. The cost of everything is going up. With Aruba being an island labor is limited, there is only one utility and everything has to be imported for goods and services. If/when I receive a reply from the GM I will post.

bob

 

[davidvel]

Yes, developers often do subsidize MFs in the early years. They have to. In a ridiculous example, imagine the fees at a resort that has sold only one week so far, if there weren't a subsidy. The fees for that one owner could be in the $$ millions! The purpose of a subsidy (at least at Marriott resorts) is to keep MFs at a level such that "normal" increases can be implemented during the sales period or at least until there are enough owners so that the HOA is self-sustaining without any developer subsidy. If Marriott guesses perfectly before construction begins - something that's almost impossible to do - the increase in the first non-subsidy year will match the typical percentage increases of the years when the subsidy was in place.

Not to be a stickler, but there is a difference in what you describe and a true subsidy. What you describe is not a subsidy, it is simply the developer paying the MF for the units it owns and has yet to sell. In CA at least, the developer always must pay the MFs for units it has yet to sell, because it is the owner of those units.

A true subsidy, on the other hand, may be paid by a developer for temporary items that are related more to construction than actual HOA expense (ie., items that the HOA has to bear but will not exist after units are sold). In this case the expense will end, and so will the subsidy, so there is no net difference.

Some developers also try to include marketing or other subsidies to reduce MF at time of first sale, but by law these must be specifically disclosed and buyers must be told what their MF will be without such subsidies. (There have also been many court cases finding such subsidies to be misrepresentations.)

 

[Dave M]

No, generally, Marriott does not pay the same MFs on unsold weeks as owners pay. (See below.) At most resorts, Marriott contributes a decreasing amount from one year to the next in each of the early years, such that the MF to be paid by each owner will be a reasonable increase over each prior year. Marriot carefully controls the amount of the subsidy in an effort to reach that result. I have had this drummed into me by a number of key Marriott people and by two different Marriott HOA presidents.

If Marriott paid the same fee on unsold weeks as owners pay, why would the number of weeks subject to MFs change, as it does at every Marriott resort that still has original unsold weeks, including at those resorts that are completely built out? Log into your MVCI account and take a look at any budget for a resort with unsold weeks (e.g., Fairway Villas). You'll note at the top of the two-year comparison for each of the budgets shown that the total number of weeks subject to MFs increases from one year to the next (e.g., from 2007 to 2008 and from 2008 to 2009).

Further, if that's not a "subsidy", you should tell Marriott, because that's their universal term for it.

 

[timeos2]

Rules are different in some areas

Not to be a stickler, but there is a difference in what you describe and a true subsidy. What you describe is not a subsidy, it is simply the developer paying the MF for the units it owns and has yet to sell. In CA at least, the developer always must pay the MFs for units it has yet to sell, because it is the owner of those units.

A true subsidy, on the other hand, may be paid by a developer for temporary items that are related more to construction than actual HOA expense (ie., items that the HOA has to bear but will not exist after units are sold). In this case the expense will end, and so will the subsidy, so there is no net difference.

Some developers also try to include marketing or other subsidies to reduce MF at time of first sale, but by law these must be specifically disclosed and buyers must be told what their MF will be without such subsidies. (There have also been many court cases finding such subsidies to be misrepresentations.)

In Florida the rules say the developer must "make up any shortfall of revenues" during the initial sales period until a majority of the resort is sold out. It does not require full payment of what would be the fees had those weeks been sold but simply that the developer cover operational (NOT reserve) expenses. As you can guess that seems to me to be an invitation for them to underfund things (after all most developers are also the management especially when a resort first opens and also hang around WAY too long as management later). And of course they aren't funding reserves for all those weeks making THAT fund "light". But that's the rule so they are acting legally. Just not in owners best interest.

 

[davidvel]

Well if that is what they are doing in CA, I'll have to research further.

 

[iamnotshopgirl]

Reply from Scott Dickerson Surf Club manager about MF's

I had a reply from Scott Dickerson manager at the Surf Club concerning MF's and the air conditioning problems. I asked two questions 1. The MF's seem high for operating cost 2. problems with the air conditioning. I ask him to explain them and bring me up to date. Scott also provided me as an attachment a power point presentation of the October 2009 annual meeting with graphs and charts explaining the budget. I will provide the attachment to anyone who wants it. Scott provides a clear picture of the MF's and air conditioning problems and he RESPONDED to me within 48 hours! Thank you Scott.



Mr. and Mrs. ,
A large percentage of the increase was because of the spike in utilities in 2008. No one could have foreseen an increase that significant in 2008. The utility companies here in Aruba are government run and not as quick to respond to pricing changes as we would like them to be. We have to pay back the amount we ran over in 2008 and we formulated the budgets for 2009 in September and October before the pricing started going down. We did not raise them higher but kept them flat to 2008 through 2009. The good news...gas is running lower and that directly effects our water and electric AND the government is lowering the rates. We will see direct results starting in November and (fingers crossed) we won't see double digit inflation and gas increases in 2009, like we did in 2008. So we should stay somewhat flat in 2010 and ahead of the game. I have attached the presentation we gave at the Annual Owners Meeting in October.
The Surf Club "reserves" are budgeted and spread throughout the year and currently up to 2027. The Surf Club was a "new" build and Marriott was responsible for the entire build, this was not the case with the Ocean Club and they are having some difficulties with responsibilities of repair on the "old" part of the building.
The A/C problem was a two day outage that was an emergency repair. The first outage was one week and the engineers thought they had repaired the problem. The second outage was two weeks and that was because the engineers obviously did not fix the problem and took the extra time to come up with the right solution and we believe, did come up with the right solution. The problems are not the A/C units themselves but the cooling water and the pipes delivering the water it takes to run the units. You can imagine the gravity and force of water dropping thirteen stories. The problem with a T-Joint in the pipes under the D-Bldg was a anomaly with the tube. A stress fracture appeared on the top (the Top of the T if you will) and our housekeeping department noticed the drip. We knew if left untreated it would eventually burst and shut down all three buildings. We made the decision and shut it down. The repair itself only took one and a half hours. Unfortunately when you are working with pipes this size (10" in diameter) the cure time for the cement is 48 hours. The reaction time was good and the repair time better.
I have some priorities here as the manager of the Surf Club and # 1 is to create new ideas to elevate your guest experience and keep the costs in line with our budgets while maintaining the property. I do not want to see increases anymore than you do, it effects the island, our guests and of course all of our ways of life on the island.
If I can assist with more information, please do not hesitate to drop me a line.
Thank you.
Scott



Scott Derrickson
General Manager
Aruba Marriott Surf Club
Phone: 011 (297) 520-6622 ~ ~ Fax: 011 (297) 586-5872
Marriott Vacation Clubs International
103 L. G. Smith Boulevard, Palm Beach, Aruba
E-Mail: Scott.Derrickson@MarriottHotels.com

 

[iamnotshopgirl]

I tried to upload the attachment by using the "manage attachments" button but I was not successful. I believe that the file extention is not supported by tug. It is a ppt file. Again, if anyone wants to see it just send me a PM and I will get it out to you.


bob

 

[IngridN]

Very interesting response to the A/C problem or perhaps I misunderstood and it went out in another building. This is about the 6th or 7th time the A/C has gone out in the Lighthouse building necessitating repairs lasting several days. It appears they have no intention of a permanent fix.

Ingrid

 

[LDT]

I tried to upload the attachment by using the "manage attachments" button but I was not successful. I believe that the file extention is not supported by tug. It is a ppt file. Again, if anyone wants to see it just send me a PM and I will get it out to you.


bob

Thanks for sending it so quickly!!!!