Why does Maintenance Fees increase?

I understand the purpose of a maintenance fees but what I don't understand is why do they keep increasing each year when the values of Timeshares Resorts are going down?

I have at Timeshare in HI and since we bought it in 1999, the MF has been increasing each time we visit but we don't see any significant improvement at the facility. As a matter of fact when we went back in 2007, the grounds, equipments and appliances looks the same as 8 years ago. I'm curious where my MF has been going?

Is the resort or the developer or someone benefiting from the MFs that are charged to the Timeshare owners?

cristinay2 asks in part: >> I understand the purpose of a maintenance fees but what I don't understand is why do they keep increasing each year when the values of Timeshares Resorts are going down?<<

There is really no relationship whatsoever between the market value of a timeshare and the ongoing, daily costs to maintain and manage the infrastructure of a facility. Maintenance fees will ALWAYS increase, at least slightly (sometimes considerably more than slightly) right along with the associated rising costs of inflation, facility labor, utilities, supplies, insurance, etc. These costs have a solid "bottom", below which it is simply not possible to go --- such things simply "cost what they cost".

Market value, on the other hand, can (and does) change downward. More significantly, market value has no bottom at all until it finally reaches ZERO. Many timeshares in low demand seasons / difficult locations have, in fact, already found that bottom, as clearly evidenced by the many weeks offered on eBay for a penny, or a dime --- or a "dime a dozen". In the case of a HI timeshare, airline travel costs (heading no place but steadily upward) are already astronomical and so will continue to negatively impact market value of Hawaii timeshares, since there is just plain no other way to get there. Aloha Air and ATA now no longer even exist, further reducing competition on ticket prices. Once travel costs far exceed ownership or rental prices, people start looking for alternative vacations much closer to home --- as they clearly are already doing right now. =============================================

Re: >> ...since we bought it in 1999, the MF has been increasing each time we visit but we don't see any significant improvement at the facility. As a matter of fact when we went back in 2007, the grounds, equipments and appliances looks the same as 8 years ago. I'm curious where my MF has been going?<<

See reply in preceding paragraph above. It simply costs more all the time, just to "stay the same". Your MF are likely going exactly where they have always gone, it simply costs more all the time just to do the exact same things. Meanwhile, appliances, fixtures, pool pumps, furniture, carpeting, etc. get daily usage and require maintenance or repair just to "stay the same". Consequently, with rising costs, MF money just spreads thinner (just as it does for our grocery bills, gasoline costs, etc. ). Timeshare facilities are not in ANY way immune from rising costs; this is simply a harsh reality which cannot (and will not) ever change.

I, too, have questioned why maintenance fees continue to rise each and every year? It would seem to me that a resort with 500 units, each with 51 owners (considering it's sold out) with maintenance fees of $700 from each owner would total $35,700 per unit per year with total maintenance fees for the year for the resort being $17,850,000 (17 million 850 thousand dollars). This seems very excessive to me. I realize that maintenance fees also cover grounds, pools, housekeeping, maintaining units, replacing furnishings and appliances (every 5-7 years), exterior maintenance, employees etc. but if a resort has enough fees in reserves, the maintenance fees should NOT rise each and every year ...... (note: math is not my strong suit, so the numbers may be a little off, but you get the picture).

This is one of the MAIN problems, along with special assessments, that we had with owning timeshares, however they (developers) never tell you maintenance fees will rise each and every year and you may be slapped with possible special assessments some years when they're trying to sell you a timeshare.

jayjay has noted: >> It would seem to me that a resort with 500 units, each with 51 owners (considering it's sold out) with maintenance fees of $700 from each owner would total $35,700 per unit per year with total maintenance fees for the year for the resort being $17,850,000 (17 million 850 thousand dollars). This seems very excessive to me. I realize that maintenance fees also cover grounds, pools, housekeeping, maintaining units, replacing furnishings and appliances (every 5-7 years), exterior maintenance, employees etc. but if a resort has enough fees in reserves, the maintenance fees should NOT rise each and every year<< ==============================================

I don't dispute any of your observations above, but I would note that timeshare maintenance fees will (and must) virtually ALWAYS increase to some degree because:

1. Not many facilities have anywhere near 500 units. At the few facilities where I own weeks, just for example, NONE even have more than 50 units (1/10th the number of your example and, accordingly, 1/10 the annual maintenance fee income collected). The smaller the facility, the harder the hit on rising costs, with fewer owners to "share the load" of any necessary increases.

2. Inflation affects everything, everywhere. Utility bills rise right along with increasing fuel costs, for example. Timeshare facilities must pay those rate increases right along with everyone else. Maintenance fees cannot ever ever possibly stay the same without drying up the "reserves" well. I see "reserves" primarily as serving to help avoid the need for the dreaded and unwelcome "special assessments", or to absorb occasional minor repair or replacement costs.

3. Insurance is a very high (and ever increasing) cost item, particularly in hurricane prone areas like the Gulf Coast states. In the world after hurricanes Andrew, Charley, Wendy and Katrina, for example, insurance costs just absolutely skyrocketed. Some companies left the area entirely, refusing to underwrite there any more at all. Deductibles in Florida can be (and often are) HUGE before any insurance coverage even kicks in at all. Dipping into existing reserves at "a million dollars per whack" is obviously neither possible nor realistic.

4. Property taxes. While the resale market value of individual timeshare weeks may well become stagnant (or decrease), particularly in a weak economy, the assessed value of the overall physical property itself will virtually always increase, at least slightly --- more so in areas where there is simply no more desirable bulding space (the Florida Keys and Fort Myers Beach come immediately to mind as two specific examples). When property taxes increase, those increases must necessarily be passed directly along and become reflected in maintenace fee increases.

I'm certainly not defending maintenance fee increases; I don't like them any more than anyone else. That said, however, I clearly understand that these increases are simply an inevitable and indisputable fact of economic life --- and I very clearly understand why (although understanding why sure doesn't mean that I like it one bit). Unfortunately, however, it will be forever so...

I'm glad I found this thread because this topic has bugged me for several years. Let's use jay jay's example (but cut it to 200 Units.... 150 Units are owned by 'members' the other 50 were 'retained' by the developer). Surely it would seem fair that ALL Fixed costs would be shared as 75/25 percentages. That is groundspeople, maintenance staff, office/desk/management salaries, etc. The same for insurance, taxes and such.

Unfortunately, it is impossible to get an 'Audited and Itemised' Statement on the above mentioned costs. It is easy to 'suspect' that Owners are paying ALL the costs while the developer simply pockets the profits... but how do we know for sure?

donaldd67 wrote:

I'm glad I found this thread because this topic has bugged me for several years. Let's use jay jay's example (but cut it to 200 Units.... 150 Units are owned by 'members' the other 50 were 'retained' by the developer). Surely it would seem fair that ALL Fixed costs would be shared as 75/25 percentages. That is groundspeople, maintenance staff, office/desk/management salaries, etc. The same for insurance, taxes and such.

Unfortunately, it is impossible to get an 'Audited and Itemised' Statement on the above mentioned costs. It is easy to 'suspect' that Owners are paying ALL the costs while the developer simply pockets the profits... but how do we know for sure?

If it's run by an HOA, they send out yearly financial statements to all owners.

cristinay2 I understand the purpose of a maintenance fees but what I don't understand is why do they keep increasing each year when the values of Timeshares Resorts are going down?

{PHILL12} The simple answer is that the maintenance cost keep going up!

Remember just because your unit isn't worth what you paid the resort and property has probably gone up in value.

I was at our owners meeting this Memorial week and being a owner for many years our fee's go up every year.

They were asked about the high fee's $838.00 in 2008 and the resort explained and maybe your Hawaii resort is run the same way.

Our resort was built 25 years ago and in many ways was ahead of its time and still one of the best resorts. They were one of the first to start the lock-off units.

They have a system that every year part of our resort is getting up-grades and this is in their plans couple years in advance and the maintenance fee's pay for this. The resort has never been behind in money to take care of the resort.

It was stated that years ago when the Ridge was built and then added to that they wanted to be upfront about the plans in the future and have the money to do this without taking advantage of the owners.

They stated that many of the resorts like in Florida play the low maintenance fee game and then when the resort starts to show its age they will run in and have special fee that owners have to pay for the repairs and they believe this not only is underhanded but really resort had no plans for the future and up keep of the resort.

It was stated that when these resorts were being built it was easier to make sales if people saw low mf's and this is something that will not happen with the Ridge.

This is one of the reasons for so many owners like us that own more than one unit here!

PHILL12

Jay, have you actually examined one of those 'statements'... for a CLEAR explanation of Total Costs and the 'breakdown' per TS-Unit/week?

I have just finished reading several hundred postings (after a 'search' for MFs) and lucky to find my post of 6 months ago.

Several Posters make 'presumptions' and mathematical calcuations on what they 'think' fees should be. Perhaps we (owners) should INCIST on an AUDITED Statement of all costs and the 'allotment' to each Unit.

I surely hope this Forum can develop a 'reasonable' solution to this issue.

This is 'SOME' of the Information I would like to see on the 'Statements' from my TS-Unit Managment

1) Total number of ACTUAL UNITS (c/w Breakdown of 1BR, 2BR, Studio, Penthouse, 3BR, etc) 2) ACTUAL Listing of Unit-Weeks that are 'Owned' by individuals and those retained by Developer .... it is probably 'wishfull thinking' to have a list of NAMES of 'fellow-owners'... 3) Then, ALL Costs should be Itemized.... Insurance, Taxes, Salaries, Tradesmen fees, repairs... groundskeeping, stuff I would not know about.... Surely, 'Owners' should NOT be responsible for Units 'in arrears' or for Resale, whatever. 4) The Statement should have the SEAL and Signature of a Licensed Auditor/Accountant.

You other Owners (with greater Management Skills and Experience) should be able to expand on this.

A properly managed resort should have reserves in place so that maintenance fees should not rise very much, if at all, each and every year, not to speak of possible special assessments that can be charged on top of maintenance fees.

Rising yearly maintenance fees and possible special assessments you never hear about in developer presentations.

On another forum that relates to a higher end timeshare resort, the maintenance fees and special assessments amount to $2500 for 2009 and this is after people have paid big bucks for the week in the first place. There's not a place on this earth that is worth that kind of money for one week of timeshare.

Of course, owners are up in arms, but the only thing they can do is PAY IT. That's one of the major pitfalls of timeshare ownership. Once you sign on that dotted line, they have you exactly where they want you.

Quote:

Of course, owners are up in arms, but the only thing they can do is PAY IT.

Jay... Is that a "Legal Decision"... If so, by WHOM....

I repeat MY Question.... What FORM of Statements have you actually seen?

For the "RECORD".... I (for maybe only one owner??) am NOT interested in reading more drivle about how we Have to Behave like a flock of Stupid Sheep (and do nothng but accept the decisions of Mediocure Management Groups. I DO hope participants of this forum develop a PLAN to put a Stop to what surely seems to be a 'Universal' problem.

Are there any lawyers reading these threads? Do we have the 'germ' of a Series of Class Actions?

donaldd67 wrote:

Are there any lawyers reading these threads? Do we have the 'germ' of a Series of Class Actions?

Mike,.. 'point taken'... but let's attempt to focus on a PLAN or Solution.

For instance, HOW might we (owners) be armed to get Factual Information? A simple "List of Dispersements" is not very informative (without knowing the Total number of Unit-Weeks AND the RATIO of Private Owners to Developer Owned units).

jayjay wrote:

Rising yearly maintenance fees and possible special assessments you never hear about in developer presentations.

On another forum that relates to a higher end timeshare resort, the maintenance fees and special assessments amount to $2500 for 2009 and this is after people have paid big bucks for the week in the first place. There's not a place on this earth that is worth that kind of money for one week of timeshare.

jay jay... your TWO points are absolutely true. Your first point MAY be the START of our Plan. At least it may help New Buyers (of Developer Units) to ask better questions than I did when I made initial purchases.

Suggestion: INCIST on the Developer providing an "Audited Statement" of the TOTAL actual Units, the number of Unit-Weeks that the developer INTENDS to Sell and finally a "Budget".... Unfortunately, there is no point to ask these details FROM Resale Owners.. because that information was never given to them.

When I owned timeshares, the HOAs and/or management sent out financial statements with their maintenance fee bills.

donaldd67 wrote:

For the "RECORD".... I (for maybe only one owner??) am NOT interested in reading more drivle about how we Have to Behave like a flock of Stupid Sheep (and do nothng but accept the decisions of Mediocure Management Groups. I DO hope participants of this forum develop a PLAN to put a Stop to what surely seems to be a 'Universal' problem.

Are there any lawyers reading these threads? Do we have the 'germ' of a Series of Class Actions?

Participants in this forum don't have the neverending finances available to legally take on the entire timeshare industry, even collectively.

As I have said many times before, until and unless timeshares are regulated by the federal government, then things will continue rocking along just as they are.

The only thing we can do in forums such as this one is try to educate people on the subject of timesharing.

If everybody stuck together (as a union) and refused to pay the fees maybe you will get some type of response/action.

loul12 wrote:

If everybody stuck together (as a union) and refused to pay the fees maybe you will get some type of response/action.

Unfortunately this reaction will only yield owners with a Negative (bad) Credit Rating

donaldd67 wrote:

loul12 wrote:

If everybody stuck together (as a union) and refused to pay the fees maybe you will get some type of response/action.

Unfortunately this reaction will only yield owners with a Negative (bad) Credit Rating

Exactly, but one thing you CAN DO is involve yourself in HOA and/or management meetings with your input.

Also, you have the choice to vote out all the current HOA members at the next election if you think they are not working in your (owner's) best interest.

There are things that can be done but it takes a concerted effort on all owners.