To: PIBC Owners 11/2/01
From: Leo Grief
RB: Management fee
After reading my memo of 10/27/01 regarding Marriott’s fee of $164,000 for 2001. (Estimated to be $175,00 for 2002) people asked what does Marriott do for this money? Marriott is paid for all costs incurred by the club. This $164,000 is over and above these costs and is clear profit. The next question is why do we pay them this money? What has Marriott done for us?
The question should be what has our Board done for us.
Our Board told us that with Marriott managing the club we would have a more sophisticated management and cost control system access to their expertise in resort related items and access to their purchasing power.
What our Board really got us was continuously escalating maintenance and reserve fund costs and a run down resort. The run down resort is a statement of the Board and Marriott.
When our board sought out a new management company the reply was that no one was interested because of the poor condition of the resort. Marriott created these poor conditions during their 10 years of management with no apparent action taken by our Board.
So, with no one available to manage the resort from the people the Board talked to, what do we do?
Our board is contemplating signing a new agreement with Marriott for 6 years. Yes, 6 more years of poor management. As I understand it a condition of the agreement put forth by Marriott is that the club upgrade to Marriott’s standards. Some of the items they are talking about are new tile, new furniture, new kitchen cabinets. This will be paid for with a special assessment of approximately $1600 for each week you own. This will give Marriott $80,000 of our money to upgrade each unit, over $3,000,000 of our money to upgrade the resort. We could be giving Marriott our money, at no cost to them, to create a Marriott resort.
It is the opinion of some owners that this upgrade is unnecessary especially since some upgrades were just done recently.
If the owners were asked to choose between completing the projects for which the board already has the money for or pay a $1600 special assessment to do more of the Marriott’s upgrades, I’m sure the vote would be in favor of completing the current project.
Being Marriott’s contract expires on 12/31/01 we should write a new agreement to expire on 12/31/02.
Our board needs to be sure that it is written in a manner to protect the Owner’s vacation place and investment and not Marriott’s desire to make it a Marriott resort.
We also need assurances that a maintenance program is put into effect and accomplished. It hasn’t happened in 10 years why does the board think it will happen in another six?
The 10% fee and the items to which it is applied also need to be reviewed.