Especially during tough economic times many resorts are faced with the ogre of unpaid maintenance fees, and especially for smaller and/or sold out resorts this can have drastic consequences for both owners and the resorts themselves. Unfortunately, David Walley’s Hot Springs Resort & Spa in northern Nevada is currently facing just such a situation.
According to Gary Grottke, treasurer of the Walley’s Property Owners Association and president of Quintus Resorts, as many as 40% of the resort’s 6,600 owners have not paid their maintenance fees for 2010. The resulting financial strain on the resort’s ability to pay its bills and keep the property in decent shape is likely to result in one of only three likely scenarios, none of them pleasant: A special assessment on owners who have paid up; cutting back drastically on services and maintenance at the resort; or closing the resort entirely.
Florida-based Celebrity Resorts, who bought out most of Walley’s real estate and management contract in 2008 (Quintus still owns some 500+ weeks), is opting for the special assessment option, to the tune of $494-$939 per interval. A meeting notice was sent out to owners in January that said “operating funds are depleted, and in order to continue operations, a special assessment is necessary.
“Ultimately, if the special assessment does not get approved, it is anticipated that the 2010 operating expenses will deplete your Association’s assets within the first quarter of 2010. In order to accurately identify the amount necessary to correct the deficit and replenish the reserve and operating funds, measures were first taken to reduce operating expenses and correct the operating budget. With a positive collection of the special assessment, the Association can eliminate the deficit and move forward with operations.”
A meeting was held on Feb. 21 but there were not enough votes to reach a quorum so another one will be held this Saturday (Feb. 27). Of course no one is happy about the situation, and many feel that Celebrity did a poor job of communicating with owners about the situation.
Ultimately it will come down to what the timeshare owners decide. They feel, with justification, that it isn’t fair that they should have to take on the extra burden of others’ unpaid obligations. In the end it will depend on how many of them want the resort to stay open, and whether or not they can afford the special assessment.
If they say “No”? The POA’s choices are difficult. They can increase the effort to collect the unpaid dues, cut expenses wherever they can and try to continue operations until their financial situation is resolved– or they can temporarily close the property.
Walley’s is not alone. This scenario is playing out, or will soon play out, at many timeshare resorts throughout the world where timeshare owners are essentially being asked not just to pay more for maintenance but to actually save the resort properties (and their own investment in their holidays).
The question then becomes, how much do timeshare owners love their resorts and vacations? And how much can they afford to love them?