[OFFICIAL Vistana *2019* Maintenance Fees Thread]

[DannyTS]

Seems like Westin Flex MF are quickly coming inline with the cost to rent. I bet the delinquency % will increase fairly quickly when owners figure this out and just walk.

If this happens Marriott will just pick up some cheap inventory

 

[dioxide45]

This is the kind of vague corporate verbiage that makes me very suspicious.

The good thing, as weeks owners, is that we will get to see the full financial breakdown once they start sending out the notice of BOD meetings (budget meetings).

 

[DannyTS]

Does anyone know how the resorts reserves are reported in the MVW balance sheet? If they report it as corporate cash it would certainly improve their financial ratios and be able to borrow cheaper thus improving their profits.

 

[dioxide45]

Does anyone know how the resorts reserves are reported in the MVW balance sheet? If they report it as corporate cash it would certainly improve their financial ratios and be able to borrow cheaper thus improving their profits.

I don't believe they report them at all, see section A-19 here. These are held in association accounts.

 

[DannyTS]

I don't believe they report them at all, see section A-19 here. These are held in association accounts.

Say they keep 5 millions in reserves for each property. For 100 properties it is not hard to imagine a bank giving them a lot of favors for depositing 500 millions. So even if they do not report it in their balance sheet they can still benefit from it quite a bit. I am being very conservative here. in 2018 Lagunamar reported $147,000 in interest revenue. SVV is expecting $189,000 in 2019. Since I assume these deposits are short term in nature, the reserves can be more than 10 million dollars per resort so they can certainly get a deal for 1 billion dollars or more that they deposit at a certain bank.

 

[dioxide45]

Say they keep 5 millions in reserves for each property. For 100 properties it is not hard to imagine a bank giving them a lot of favors for depositing 500 millions with them. So even if they do not report it in their balance sheet they can still benefit from it quite a bit. I am being very conservative here. in 2018 Lagunamar reported $147,000 in interest revenue. Since I assume these deposits are short term in nature, the reserves can be double if not triple per resort.

I am not sure they drop all the money in to a single bank account. It is up to each HOA/BOD to decide where to put the money. Marriott doesn't decide. At Grande Vista, the board wants all the reserve money to be fully insured by FDIC. So that means spreading it out over many, perhaps hundreds of different institutions since the limit is $250,000 per institution.

 

[controller1]

I am not sure they drop all the money in to a single bank account. It is up to each HOA/BOD to decide where to put the money. Marriott doesn't decide. At Grande Vista, the board wants all the reserve money to be fully insured by FDIC. So that means spreading it out over many, perhaps hundreds of different institutions since the limit is $250,000 per institution.

It's highly unlikely they have deposits in hundreds of different institutions due to FDIC insurance limits. Most large corporations do not look upon the FDIC insurance limits as something that really concern them during their due diligence of which banks to use. The cost of using hundreds of banks would be much larger than the risk it is mitigating.

 

[dioxide45]

It's highly unlikely they have deposits in hundreds of different institutions due to FDIC insurance limits. Most large corporations do not look upon the FDIC insurance limits as something that really concern them during their due diligence of which banks to use. The cost of using hundreds of banks would be much larger than the risk it is mitigating.

You would think, but I have been to two Grande Vista BOD meetings and they have explicitly indicated that they wanted their reserve funds covered 100% by FDIC insurance. These are the individual boards, not the corporations funds. The board needs that money within the next 10 years and it seems they aren't willing to take the gamble. I don't really get it either, but that is what they have said.

 

[controller1]

You would think, but I have been to two Grande Vista BOD meetings and they have explicitly indicated that they wanted their reserve funds covered 100% by FDIC insurance. These are the individual boards, not the corporations funds. The board needs that money within the next 10 years and it seems they aren't willing to take the gamble. I don't really get it either, but that is what they have said.

That's crazy. Buy a short-term treasury and be done with it! But you also may have some boards that have very little financial acumen.

 

[Ken555]

You would think, but I have been to two Grande Vista BOD meetings and they have explicitly indicated that they wanted their reserve funds covered 100% by FDIC insurance. These are the individual boards, not the corporations funds. The board needs that money within the next 10 years and it seems they aren't willing to take the gamble. I don't really get it either, but that is what they have said.

Are those Marriott controlled boards or independent?


Sent from my iPad using Tapatalk

 

[Ken555]

It's highly unlikely they have deposits in hundreds of different institutions due to FDIC insurance limits. Most large corporations do not look upon the FDIC insurance limits as something that really concern them during their due diligence of which banks to use. The cost of using hundreds of banks would be much larger than the risk it is mitigating.

FWIW: https://www.bankrate.com/banking/savings/6-ways-to-insure-excess-deposits/


Sent from my iPad using Tapatalk

 

[dioxide45]

Are those Marriott controlled boards or independent?


Sent from my iPad using Tapatalk

Hard to say. Like Vistana, the boards are somewhat hand picked. People nominate themselves, but they go through a selection committee. We do have more choice of people to vote for on Grande Vista's board than we do for SVV. At SVV this year, there were two nominees on the ballot and it said to vote for up to two. What kind of vote is that? They are filling two positions with two people also picked by a nominating committee. Unless someone nominates someone at the meeting and votes them in, the board for SVV is hand picked. For Grande Vista it does seem that the board is more owner controlled and this is based on experience at two BOD meetings in person. However, the board is pretty much a pushover and just about rubber stamps most things. They did manage to keep Grande Vista's MFs under $1500 for 2019 even though Marriott came to the meeting asking for more.

 

[Ken555]

Hard to say. Like Vistana, the boards are somewhat hand picked. People nominate themselves, but they go through a selection committee. We do have more choice of people to vote for on Grande Vista's board than we do for SVV. At SVV this year, there were two nominees on the ballot and it said to vote for up to two. What kind of vote is that? They are filling two positions with two people also picked by a nominating committee. Unless someone nominates someone at the meeting and votes them in, the board for SVV is hand picked. For Grande Vista it does seem that the board is more owner controlled and this is based on experience at two BOD meetings in person. However, the board is pretty much a pushover and just about rubber stamps most things. They did manage to keep Grande Vista's MFs under $1500 for 2019 even though Marriott came to the meeting asking for more.

I am very pessimistic about any Marriott or Vistana board dictating their reserve fund investments in any specific method. Since you state the board explicitly stated they want their funds FDIC insured, as an owner I suggest you ask for details. In the absence of proof, I don’t believe it and neither should you.


Sent from my iPad using Tapatalk

 

[DannyTS]

Was there a board decision in that sense or some board members just asked for this (and possibly ignored)? In any case, even if they do it at Grande Vista it still does not mean they do it at all the Marriott and Vistana resorts.I just do not see each resort dealing with tens of banks.

 

[controller1]

FWIW: https://www.bankrate.com/banking/savings/6-ways-to-insure-excess-deposits/


Sent from my iPad using Tapatalk

The article has manageable recommendations for individuals but the vast majority of large corporations are not going to follow those six ways.

 

[Ken555]

The article has manageable recommendations for individuals but the vast majority of large corporations are not going to follow those six ways.

I found it interesting that there are services to help open and manage multiple accounts for this very purpose.

I believe most corporations keep funds in multiple accounts with various ways to minimize risk, but not via FDIC. I’m sure we could find out if we were really that interested.


Sent from my iPad using Tapatalk