To: PIBC owners 10/27/01
From: Leo Grief
RE: MVCI management fee
1. We will be paying this fee in the amount of $164,000 this year (projected to be $175,000 next year). This fee is 10% of our maintenance fee.
This is clear profit to Marriott per C. Lightbourn.
This amounts to $13,666 per month or $3,111 per week.
As an individual owner you will be paying Marriott $74.50 clear profit for each week you own.
2. This $164,000 is paid to “Marriott Corporate.”
The categories of work performed by “Corporate” are:
Accounting $5280 + Marriott’s 10%
Administration $13,200 + Marriott’s 10%
Owner services $55,000 + Marriott’s 10%
Accounts receivable $13,970 + Marriott’s 10%
They are paid for this work in the amounts indicated plus Marriott’s 10% mark up.
All other categories of work, which have money budget for same are handled by the club. Over and above these costs we pay an on site administration fee of $115,000 plus Marriott’s 10% mark up.
If the club would perform the work currently performed by Marriott corporate we could eliminate Marriott and their $164,000 markup fee.
I realize this is an over simplification.
3. Lets look at something else related to this 10% markup.
We receive invoices for electricity, water, sewer, telephone and cable TV. The budgeted cost for these items in 2001 is $300,000.
We pay a fee to process these invoices. No problem.
We also pay a 10% markup fee ($30,000) on the $300,000 which is the cost of these services provided by others. Why?
I think this matter requires looking into therefore I Am requesting that our board do so and reply to this letter.