General MF Questions- All Starwood Resorts

I would like some help understanding some costs on MFs. I have never really taken too much time looking at the breakdown of costs. As I have repeated many times here on TUG, I am all for high MFs as long as the service is appropriate for costs. With that said, I have very often experienced poor service / dirty rooms at many Starwood resorts. With that said, there are a couple of costs that do not make sense to me. I am using two (WKV and WKORV) as reference for numbers.

Housekeeping- I do not understand why the housekeeping bills are so high at all of the resorts; especially Hawaii. I realize that it may include some other costs such as cleaning and maintenance of the common areas but it seems as if the cleaning bills out out of wack. WKV is $293 for housekeeping a 2BR LO while WKORV is $551 for the 2BR DLX LO. They only clean the rooms once a week which only requires a little laundry and less than 2 hours of cleaning. Even with the common area costs $551 seems outrageous. I understand minimum wage is higher in Hawaii but unless we are paying $100 or so per hour for entry level jobs this just doesn't make sense. Prior to looking at this breakdown, I would have estimated housekeeping costs to be less than $100 per 2BR LO.

Management Fee- WKV cost is $82 for a 2BR while WKORV is $132 for a 2BR DLX LO. What is this fee for? I orignally thought it might be for admin costs or reservations but there are separate line items for those. Also a 2 BR LO fee is $95.63 while the deluxe unit is $131.77. Why is the difference so great for managing these two very similar units. With more rooms in Kaanapali, why are the management fees so much higher; I would expect for them to be lower based on economies of scale.

Any help in helping me understand the breakdown of these costs would be appreciated.

If you want to compare between resorts, I would suggest comparing 2BR's against 2BR's, and not the 2BR Deluxes at WKORV -- the 2BR Deluxe MFs are way out of whack as compared to normal 2BRs. They're not proportionally based on difference in size as they probably should be.

The WKORV 2BR Deluxe MFs are 38% more than a normal 2BR, but the unit is only 11% larger.

I believe the "Management Fee" is the 10% fee that Starwood charges to run the property, over an above the expenses. It is called out in the condo/TS documents. Since it is 10%, it is higher in Hawaii because all the other costs are higher.

As for Housekeeping fees, they do seem high.
For WKORN the fees per unit week are:

$414.77 for the Vacation Club Assoc.
$ 35.90 for the Apt. Owners Assoc.
$ 21.07 for the Master Assoc.
---------------------------
$471.74 total

It is interesting where they carry these costs.
I am guessing the costs break down as follows.
The $45.90 for the Apt. Owners would be for cleaning the common hallways, stairs and elevators in the buildings.
The $21.07 for the Master Assoc. would be the for the pools, water falls, outside bathrooms, etc.
And the $414.77 would be to clean the rooms twice. Once thoroughly at visit end, and a quick tidy mid week. I would guess that it also includes the housekeeping costs for the lobby, reception, and other areas, but that is not for sure. That does seem awfully high.

Greg

YYJMSP said:

If you want to compare between resorts, I would suggest comparing 2BR's against 2BR's, and not the 2BR Deluxes at WKORV -- the 2BR Deluxe MFs are way out of whack as compared to normal 2BRs. They're not proportionally based on difference in size as they probably should be.

The WKORV 2BR Deluxe MFs are 38% more than a normal 2BR, but the unit is only 11% larger.

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The % of fees per VOI (per villa type) is per CCRs (stated in Owners Manual) - no one ever said (or claimed) that it is relative to villa size. They are not - the Deluxe owners are paying more than their share per sqft.

btw - the 1Bd Villas fees at WKORV are not proportional to 2Bd Premium LO either - eventhough the 1Bd are essentially the 2Bd LO w/o the studio (sans foyer). If you were to break it down by sqft - the best bargain (fee-wise) is the 2Bd LO Premium, then the 2Bd LO Deluxe, and then the 1Bd.

Westin5Star bring up a great point - no matter what the villa size is (and a in line with a comment I made in the WKORVN MF thread by Greg). It is interesting to see the Fees broken down by villa type - and then ask the question - how is a certain fee (e.g. housekeeping) justified?

This goes to the same old question on how much are Owners subsidizing non-Owners (SVO revenue) when fees seems out of whack for the service provided no matter if it is a Deluxe or Premium villa.

The audited statements show a much more detailed breakdown of the line items summarized in the approved budget.

If you look at the "Schedule of Operating Fund Revenues and Expenses", you'll see that Administrative & General is broken down to:

• Administrative - wages
• Administrative - other
• Administrative and general - Orlando
• Customer administration
• Accounting - wages
• Data processing
• Facility management
• Provision for uncollectible amounts
• Postage and printing
• Audit
• legal
• Annual meeting
• Bank fees

This is much more useful information that what's summarized in the approved budget document.

The "Housekeeping and Rooms" line item breaks down to:

• Front office - wages
• Front office - other
• Housekeeping variable - wages
• Housekeeping variable - other
• Housekeeping maintenance week - wages
• Housekeeping maintenance week - other
• Owner reservations - wages
• Unit replacement
• Line replacemnt

Follow-up:

Per 2010 Owners Manual (pages 32-34)
The Common Interest per Unit (Rel Valuation/unit) at WKORV is as follows:
1Bd = 0.002853946 (43,873.44)
2Bd LO Prem = 0.003382575 (52,000.00)
2Bd LO Dlx = 0.004661000 (71.653.10)

The 2011 MF for the 2Bd LO Dlx = $2825.97 - our villa

Based on the above I can calculate the MF for the 1Bd and 2Bd LO Prem as such:
1Bd = $1730.35
2Bd LO Prem = $2080.56

which should be correct (w/o looking...)

Now if one were to go by villa size...
Note: per the 2010 Owners Manual (pages 264-271) - similar villa types are not all the same size - so these are approx. Also, be aware the 2Bd LO OF center Prem are much larger than the 2Bd LO Prem (non-OF) - YET have the same valuation. This is because the 2Bd LO OF center studios have a lanai

1Bd => ~995sqft
2Bd LO Prem (non-OF) => ~1475sqft
2Bd LO OF Prem (OF) => ~1700sqft
2Bd LO Dlx => ~1810sqft

so... the 2Bd LO Dlx villas are ~23% larger (+335sqft) than the 2Bd LO Prem (non-OF) villas - yet the MFs are ~38% higher.
btw - the lanais for the 2Bd LO Dlx villa combined is ~330sqft (!!!) - that is the size of a small hotel room - lol


Added...
I take back what I said in the post above regarding best MFs based on size - they are as follows:
1Bd => ~$1.74/sqft
2Bd LO Prem (non-OF) => ~$1.39/sqft
2Bd LO OF Prem (OF) => ~$1.21/sqft
2Bd LO Dlx => ~$1.56/sqft

so the 2Bd LO Prem (OF-center) has the best value per size - and the 1Bd has the worse. This goes to support (IMO) that the OF-center 2Bd LO Prem villas offer the best value at WKORV

DavidnRobin said:

Now if one were to go by villa size...
Note: per CCRs - similar villa types are not the same size - so these are approx. Also, be aware the 2Bd LO OF center Prem are much larger than the 2Bd LO Prem (non-OF) - YET have the same valuation. This is because the 2Bd LO OF center studios have a lanai

1Bd = ~995sqft
2Bd LO Prem (non-OF) = ~1475sqft
2Bd LO OF Prem (OF) = ~1700sqft
2Bd LO Dlx = ~1800sqft

so... the 2Bd LO Dlx villas are ~22% larger (+325sqft) than the 2Bd LO Prem (non-OF) villas - yet the MFs are ~38% higher.

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Where did you see ~1800sqft for the Deluxe units? MSC lists them as 1550sqft (vs 1400sqft for a regular 2BR LO)

YYJMSP said:

Where did you see ~1800sqft for the Deluxe units? MSC lists them as 1550sqft (vs 1400sqft for a regular 2BR LO)

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Pages 264-271 in the 2010 Owners Manual
Go to MSC - Assoc Info - WKORV - then open 2010 KOR Gov Docs.

Perhaps the difference is the lanai? I count this because - we spend a lot of time there - including friends sleeping out there - which I would like to do until about 3AM when the wave noise refuses to stop... lol

the interior floor space is listed as ~1375sqft for the 2Bd LO Prem and ~1550sqft for the 2Bd LO Dlx - so that appears to be the difference.

DavidnRobin said:

Pages 264-271 in the 2010 Owners Manual
Go to MSC - Assoc Info - WKORV - then open 2010 KOR Gov Docs.

Perhaps the difference is the lanai? I count this because - we spend a lot of time there - including friends sleeping out there - which I would like to do until about 3AM when the wave noise refuses to stop... lol

the interior floor space is listed as ~1375sqft for the 2Bd LO Prem and ~1550sqft for the 2Bd LO Dlx - so that appears to be the difference.

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Gotcha -- looks like MSC is listing sizes without the lanais...

gregb said:

I believe the "Management Fee" is the 10% fee that Starwood charges to run the property, over an above the expenses. It is called out in the condo/TS documents. Since it is 10%, it is higher in Hawaii because all the other costs are higher.
Greg

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So it is in Starwood's best interest if our MFs are high(er)??? WOW, this seems like a terrible deal for us that should be renegotiated. My opinion is that Starwood should be paid a fixed fee based per unit and or location. I would suggest that it is part of the management companies duties to minimize operating expenses yet Starwood financially benefits from seeing that they increase. If this is the deal and I were Starwood, I would do everything I could to make sure that MFs go up (fast).

I'm pretty sure that SVO's strategy all along was to lure owners in with subsidized MFs, then reduce the subsidy once it was sold out. What they probably didn't anticipate was the downturn in the market which would stifle new development, which is where the big money is. So, to survive, they turned vulturistic and pecked off the flesh of their existing owners. Not fresh meat, but meat nonetheless.

Oh, and I have no doubt that housekeeping is contracted out to a shell company run by...Starwood. And that the maintenace is contracted out to a shell company run by... Starwood. So we're playing inflated rates on top of inflated rates.

Time for a cup of morning coffee before posting? Relax. Even with the $16 per unit/week subsidy being removed, the MF went down. ... eom

David, ... "the 2Bd LO Dlx villas are ~23% larger (+335sqft) than the 2Bd LO Prem (non-OF) villas - yet the MFs are ~38% higher."

The percentage fee attributable to each of the types of units is set by the original condominium declaration and cannot be changed without the requisite number of votes (usually 75% of the owners). I don't see the owners of the non-Deluxe units voting to increase their assessments to help out the owners of Deluxe units.

The original thinking seems to have been based on more than square footage. Like Deluxe units being corner units with views in 2 directions and a lanai or balcony for the smaller units. ... eom

LisaRex said:

I'm pretty sure that SVO's strategy all along was to lure owners in with subsidized MFs, then reduce the subsidy once it was sold out. What they probably didn't anticipate was the downturn in the market which would stifle new development, which is where the big money is. So, to survive, they turned vulturistic and pecked off the flesh of their existing owners. Not fresh meat, but meat nonetheless.

Oh, and I have no doubt that housekeeping is contracted out to a shell company run by...Starwood. And that the maintenace is contracted out to a shell company run by... Starwood. So we're playing inflated rates on top of inflated rates.

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I believe that developers subsidizing the MF for new developments is a common practice in the industry.

One can look at it from Lisa's point of view, as expressed above.

Or one can look at it from the point of view that the early owners got a good deal for the first few years. But that good deal had to end sometime. Since they should be disclosing the budget when you purchase, if you know what to look for, you can see the subsidy and anticipate the effect of losing it.

Greg

gregb said:

Since they should be disclosing the budget when you purchase, if you know what to look for, you can see the subsidy and anticipate the effect of losing it.

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The current budget is part of the owner's manual, which I don't think you'll see until after you've purchased.

jarta said:

David, ... "the 2Bd LO Dlx villas are ~23% larger (+335sqft) than the 2Bd LO Prem (non-OF) villas - yet the MFs are ~38% higher."

The percentage fee attributable to each of the types of units is set by the original condominium declaration and cannot be changed without the requisite number of votes (usually 75% of the owners). I don't see the owners of the non-Deluxe units voting to increase their assessments to help out the owners of Deluxe units.

The original thinking seems to have been based on more than square footage. Like Deluxe units being corner units with views in 2 directions and a lanai or balcony for the smaller units. ... eom

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Please go back and reread what I wrote. I said the same thing --> %-tile is established by CCRs (OM) - I read this and was well aware of this a long time ago (and posted these numbers probably 4-5 years ago...). I never said anything about changing them - or even implied it. (or understand where that even comes from...?)

It is likely the uniqueness {sp?} of the villas is the reason for the disportational %/sqft (e.g. panaromic view...) - this was also written about a long time ago (but a good refresher). Added value such as the panaromic view (as well as others - lanai size, , lighting, wider unit...) is exactly why we love our OF Dlx villa (even w/ the disproportional %-tile). Hell - the lanai and view alone fits us to a tea...

This is somewhat tangental to the OP (which is an excellent topic), but didn't want to start another thread...

IMO (<--- pay attention here...), I do believe that the OFC villa offers the best overall value at WKORV - and if I had the $$$ (or desire) I would try and pick some more up at the prices reported here. (whether these prices are common or not is another question - as well as the ROFR price for these). The front-on OF view for both sides of the LO, the studio has a lanai, and offers an excellent rental that is profitable. These villas are narrower than the Dlx villas - and do not have the panaromic view, or the associated lighting - but that is made up for with the lowest MF/sqft and the price difference to the Dlx.

Check out the 2010 version of WKORV Gov_docs (OM/CCRs) - which says READ THIS on the front cover. The 2010 OM has the 2010 'prices' that are listed for the various WKORV villas (including premium and fixed week costs, etc) - now that is a real chuckle... iirc, the OFD is ~$124K, and OFC is ~$110K. I friggin' hope that these prices are not used in the property tax evaluation...!

YYJMSP said:

The current budget is part of the owner's manual, which I don't think you'll see until after you've purchased.

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I think you are right. When I purchased from *wood, they never gave me the Owner's Manual. I didn't realize it was missing until about a year later.

But as a purchaser, you are supposed to be given the Owner's Manual BEFORE you sign the paperwork. Inside the front cover, in great big 48pt type, it says: "READ THIS DISCLOSURE STATEMENT BEFORE SIGNING ANYTHING" Now that is hard to do if they don't give it to you when you are considering purchasing, so the sales folks didn't do the proper thing when we purchased in 2006.

But even if they only give it to you after you sign, you still have the seven day "changed my mind" clock to read the manual and then decide to say, "Sorry, but I changed my mind."

All that said, of course almost no one actually reads the manual, ever, let alone before they sign the contract. Such is life. Forewarned is forearmed.

Greg

gregb said:

I think you are right. When I purchased from *wood, they never gave me the Owner's Manual. I didn't realize it was missing until about a year later.

But as a purchaser, you are supposed to be given the Owner's Manual BEFORE you sign the paperwork. Inside the front cover, in great big 48pt type, it says: "READ THIS DISCLOSURE STATEMENT BEFORE SIGNING ANYTHING" Now that is hard to do if they don't give it to you when you are considering purchasing, so the sales folks didn't do the proper thing when we purchased in 2006.

But even if they only give it to you after you sign, you still have the seven day "changed my mind" clock to read the manual and then decide to say, "Sorry, but I changed my mind."

All that said, of course almost no one actually reads the manual, ever, let alone before they sign the contract. Such is life. Forewarned is forearmed.

Greg

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I'd be very surprised if they didn't have an OM/CCRs in the purchase package (and believe me - I do not give Sales much credit when it comes to honesty...). The purchase contract you signed references the OM/CCRs often (iirc) - as well as the pre-signed document list. For WKORVN it came on a CD (I still have it from when we bought/rescinded in 2005) in the back of the package. I also received one as a CD for our WPORV.

As a resale buyer, I only got an owner's manual because the former owner was kind enough to mail it to me.

I do think that they should be made to disclose to buyers that the maintenance fees that they are quoting are subsidized by the developer.

Well, I looked again in my green canvas case (yes I still have it) and found the CD. Guess I missed it when I purchased the unit. At any rate, they did send me a paper booklet when I asked several years ago. But I believe they only do that for original owners.

You can find the CC&R on the MyStarCentral site, once you have purchased and been processed. But that doesn't do much for you when making the purchase decision.

Now about those Developer Contributions.

I have gone back and looked at the budgets for 2008-2011. Here is what I find.


So while the developer contributions are now down to zero, they never were all that much. At their biggest, they were $46 per unit week, which is about 2.7% of a $1700 MF. Yeah it is an increase, but not earth shaking like at some resorts. And besides that, they weaned us off the contribution gradually, reducing it over three years.

Greg

Thanks, Greg. You've definitely put it in a new light for me. I appreciate your "investigative reporting" and even-handed approach.

gregb said:

Well, I looked again in my green canvas case (yes I still have it) and found the CD.

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Yes, but you didn't get this package until AFTER you signed away your life, correct?

Of course, you then have the countdown timer starting so you should read it all and decide if you want to rescind, but how many actually read everything in the great big book?

Where on mystarcentral.com are the CC&R's located?

Thanks.

Greg - thanks for looking the Dev contribution - it is a way less than what used to be given for WSJ-VG. This was written about for WSJ-VG and I looked it up in the past MFs and posted (not sure where... it was one of those inane jarta distractions - so not sure where the thread is). iirc, at one point it was over 30%+ of the MFs.

Re: Gov-docs (OM) - yes, it is one of the TS sales games that is played on unsuspecting fish (...i mean buyers...) caught in the glow of vacation bliss. The MFs for that year are contained in the OM, and the OM is available for perusal while you make up your mind "right now or the deal goes away" prior to signing the purchase contract, and the contract states that you are in agreement with the T&Cs in the OM - and you sign that you are aware of the T&Cs in the OM. But mainly - most have just listened to what the trusty salesperson (and closer) said (and there is a clause to that as well). Within the itemized MFs (within the OM) - there is a line for Dev contribution, and a statement that the contribution can go away at anytime.

I personally do not think the Dev contribution is intended directly to make the MFs seem artificially low - and do belive they are there for the purpose of covering certain items while the resort is in sales. I also think it should be disclosed as well as other key info, but ignorance is bliss in the eyes of a salesperson - and it is not required by them to tell you the downsides (as with many things in life...). This is IMO - and perhaps I am being naive... but the amount is not all that substaintial. It is interesting that we being relatively smart people can fall into the TS misinformation trap, and purchase something so expensive with so little info.

Luckily for us - a friend of the salesperson (and ours) told me to go home and search "Timeshare Nightmares" and I found TUG - and rescinded WKORVN (OF) at ~$74K!!! Unfortunately, many do not do this - and this is exactly what Sales hopes while you have dreams of future vacations clouding your vision. Actualy I was so pissed off at the misinfo that we were given (and we fell for it) - I started contributing to TUG to hopefully allow others to make an informed decision on whether TSing works for them.

The only truth that the TS salesperson told me (and I agree) - is that you are investing in vacations. We love our TSs - and we spent more than we should - but now take wonderful vacations at least instead of work-work-work all the time (luckily, having Robin come into my life helped as well...)

tschwa2 said:

Where on mystarcentral.com are the CC&R's located?

Thanks.

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Under Association Info (left hand panel) - with the docs in the right-hand panel - not all resorts have them up.