Management

Timeshare Vacation Interest Vs Management Fees Vs Cost

This is the timeshare guru. We are having a conversation about management companies in timeshare and land development. Two things will be the basis of the statements to follow. First, 30+ years of industry experience. Second, by what we consider the industry’s normal situation.

We have seen the best timeshare marketing and sales programs and can now say that management companies and timeshares today could be likened to fire and water. The timeshare project is the fire and the management company the water. Although it looks great on paper, the Home Owners Association and Property Owners Association didn’t see that the fire contained flammable liquids which water could not extinguish. The management company saw the opportunity to make what many would call “easy money”.

It is easy money. Home Owners Associations as well as Property Owners Associations face a host of problems, including unsold inventory and defaults. All of these issues are the driving factor behind the “cost” for maintaining ownership. The list of issues that are affecting the ownership base include rising maintenance fees and special assessments. But the real question is: Do these resort management companies have a solution? The answer is no. They may promise one program or another, but are they really effective? Let’s get back to reality. Does a bandage put on an artery that is bleeding permanently? My extensive research has shown that many management companies are unable to provide a business-as-usual environment for their projects, which causes discomfort to owners. A timeshare project managed by a Home Owners Association or Property Owners Association without a qualified sales and marketing staff is unlikely to survive. This is comparable to someone who has terminal cancer or a disabled patient. It is only a matter time. The maintenance fees will rise (management companies will still get their cut), special assessments will continue climbing, and there will be no end to the problem. This very special timeshare, which each person treasured and enjoyed, has now become a financial burden.

The cost of reality versus the cost! Today, every Home Owners Association or Property Owners Association is being attacked by “Deed Back” businesses. These predators are known to pray on resorts that have been paid fees, which management companies seem to make. They invite owners of timeshares to meet them and charge them to exit their timeshare. What is a deed-back company? It’s a fictional company that has been legally established and is pre-planned to fail or dissolve. The result is a significant cash shortage that causes a resort to go bankrupt. It’s called a snowball effect, because the resort has large quantities of unsold inventory. It doesn’t really affect the management companies. They will only receive less management fees if they do not take drastic measures to keep the revenue flowing. The majority of management firms have no other solution than to increase fees to their owners. These situations can have a severe financial impact on resorts and their owners. These problems can be avoided.

It is important to ask the right questions when you are considering hiring a property management firm. In today’s market, property management companies must have experienced sales and marketing personnel in order to keep the resort environment strong and healthy. Many property management companies don’t know how to keep a resort financially sound. Many people will do what it takes to survive. They depend on their “rental program” to make up the difference. It’s great in a dream but not possible in real life unless these rentals are given away. Ask any management company if they were capable of renting all units at any project in April in Garden City and Park City, Utah. If you don’t know how to select or hire the right company, it could make the difference between success (or failure) for your Home Owners Association and Property Owners Association. Property Owners Association boards and Home Owners Association board members make poor decisions that cost owners dearly. Although sales is sales, experienced sales professionals in the right industry are the best compounds for a fire containing flammable fluids.

molw.net

We are a team of professionals with each having two decades of experience in start-ups, sales, marketing, finance, HR, large scale project and profit centre management and running mature cross functional operations. At Molw.net we are big believers that knowledge transfer is critical to our industry’s evolution. We love to share our experiences and learnings through our online resources.

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