Reef Resort says I can't rent my week myself.

[okz]

I am trying to rent my week at the Reef Resort on Redweek, and today I received this email below from the resort. It was too late to contact the resort today but I plan on contacting the resort. If anyone has any comments on this matter I would appreciate hearing them. TIA

Tom McCallum <tmccallum@thereef.com> wrote:

Please note that under the Hotels Licencing Law in the Cayman Islands, only a licenced property manager in the Cayman Islands may offer rentals to the general public.

In addition, any such rentals must have tourism accommodation tax of 10% paid to the Cayman Islands Government via official monthly reporting, again by the licenced property manager.

The licenced property manager for The Reef Resort is Thompson Resorts Ltd.

In short, we would ask you to cease listing your rental to the public over the internet.

Please do not hesitate to contact our member services office at memberservices@thereef.com with any questions.

 

[Larry]

Don't know anything about requirements for rentals in the cayman islands but I have seen plenty of rentals listed for Morritts Grand and resorts on seven mile beach so unless this is somthing new it makes no sense. If you just look at redweek many cayman island resorts including the reef not only have rentals listed but several have already been rented.

I also seem to recall when I was at Morrits that several owners own multiple weeks and rent out several to cover their maintenance on the weeks they are not using.

Good luck but if this is true I would never purchase at the Reef.

 

[Pit]

Here's some relevant information. The tax is either 10% of the rental or $10/day, depending on how the guest is classified. I don't see anything that prevents you from renting your own private property (you're not operating a hotel). For clarification, I would try contacting Mrs. Janice Williams (phone and email included in linked info).

http://www.gov.ky/pls/portal/docs/PAGE/CIGHOME/PRESSROOM/ARCHIVE/200206/TOURACCOMTAX.PDF

 

[gmarine]

Thats ridiculous. First of all what is someone from the Reef doing trolling Redweek for owners renting units they own? I wonder if the person who sent the email is TUGs very own Tom Cayman.

If an owner wants to let someone else use their week let the Reef try to prove that money actually changed hands. If I was an owner ,I would look for other owners and get together to question Reef management about it.

I wonder if the Reef informs potential buyers of that policy during sales presentations.

 

[T_R_Oglodyte]

I'm not a lawyer; I only play one at TUG.

Seems to me that would be a Caymans law that would only govern activities that occur in the Caymans. Since you are not located in the Caymans the Caymans has no authority to regulate what you do when you are not in the Caymans.

If you were trying to rent the unit from the Caymans the law might apply.

 

[Seaside]

TomCayman is Tom McCallum. This information does not seem correct, perhaps he will fill us in.

 

[TomCayman]

I sent that same message to the five rental listings for theReef on RedWeek. So far one owner has come back to me via email and asked for further clarification, and the answer was :

You are entitled under your membership agreement to rent the unit, however as explained in the message sent to you via your RedWeek listing, and for the reasons noted, you may not actively solicit rentals from the general public through advertising this over the internet or other public media.

As a practical matter, owners do frequently send guests down to use their units where those guests have paid them some consideration to use the week (ie rented it from them), and there is little that can be done by the Cayman Islands Government or resort management to ensure that the laws of the land with regard to licenced property management and collection and payment of tax are followed.

However, we have been advised by the Hotels Licencing Board that they are now paying close attention to internet advertisements for Cayman Islands properties (such as Redweek, but also VRBO and other condo rentals channels), and will take appropriate action if they find properties being rented outside the licenced channels.​

I provide this information for general use by Cayman timeshare owners, but beyond that, I would ask the OP (a Reef owner) to contact me or anyone in the Member Services department directly.

I would also note that theReef has a long history of renting out owner units with success. This is something we can achieve as theReef is a resort/hotel (so in the business of renting out rooms) where all the rooms are owned by members (whether condo/fractional/timeshare) and rented out on their behalf by the management company.

Quite frankly, the vast majority of owners wishing to rent their unit do so through theReef, and that activity is what allows us to complete the circle :

owners participating in rental programme >
marketing budget from rental commissions >
renters paying to stay at the resort>
good rental returns for owners >
increasing number of owners in rental programme... etc​

This year alone we will spend cUS$1m in rental marketing for the resort, something that all owners renting their units benefit from. All funds required for this marketing budget from this come from rental commissions from owners in the programme.

I should stop now at this level of explanation, as to go further would risk leaping headlong into explaining why we are so great and do such a great job for our owners

Oh, to Pit, the link you send is not relevant to this. The Cayman Islands Government (per the doc you linked to) charges a flat fee of US$10 per day for occupancy of a timeshare by an owner / guest / exchanger, BUT, if a property is rented (and it must be rented by a licenced operator), the charge is 10% of the rental value. Given that a quick glance on our website woudl show that a weeks rent in the component parts of a 2BD unit comes to well over $3000, that is c$300 per week in Tourism Accommodation Tax, not the flat amount of $70 in Timeshare Occupancy Tax.

I posted this in the spirit of openness in the TUG community, and for other Cayman timeshare owners, I hope it is taken in that manner.

 

[T_R_Oglodyte]

I sent that same message to the five rental listings for theReef on RedWeek. …

I'm going to reiterate that I don't believe the Cayman Islands has any authority to regulate a commercial transaction involving non-Cayman residents and that does not occur on Cayman soil or within Cayman territorial waters.

 

[RMitchell]

Maybe Tom is trying to keep some value in the property or maybe he gets a cut. But at least...I don't see many EBay sales for The Reef at 99 cents and some of the timeshare properties on Cayman have dropped their internal renting programs, almost, completely. Tom has been one of the few Cayman timeshare managers that communicates through forums. I don't always agree with him but at least he communicates.

 

[TomCayman]

I'm going to reiterate that I don't believe the Cayman Islands has any authority to regulate a commercial transaction involving non-Cayman residents and that does not occur on Cayman soil or within Cayman territorial waters.

From a legal standpoint, this one is pretty simple.. the value if provided through a stay in a property located in the Cayman Islands, hence tax is due and payable, so of course the Cayman Islands government has such authority.

If I visit the US / UK and buy a product for export, I don't have to pay sales tax / value added tax....but if I pay for a service actually utilised in that country, naturally I have to pay the appropriate tax...and that includes hotel taxes.

Enforceabilty is one thing, but authority is without question.

 

[TomCayman]

Maybe Tom is trying to keep some value in the property or maybe he gets a cut. But at least...I don't see many EBay sales for The Reef at 99 cents and some of the timeshare properties on Cayman have dropped their internal renting programs, almost, completely. Tom has been one of the few Cayman timeshare managers that communicates through forums. I don't always agree with him but at least he communicates.

RMitchell,

First, I noted that we don't take a cut.... we will in the future, but right now we are still building out the resort (in fact the last phase is opening in a few weeks) and have committed to reinvesting 100% of the rental commissioninto the marketing budget in order to build revenue and occupancy as fast as possible during the build out.

Second, no, not many cheap resales at theReef, and yes, that is always a measure of the viability of a resort.... and to us offering a viable rental programme option is part of that.

Third...lack of decent rental programmes at timeshares is not a Cayman problem, but a global one... I like to stay in timeshare resorts and would often be happy to rent a unit (exchange is nowhere near as flexible as rentals), I am disappointed that more resorts don't make an active effort to rent weeks for their owners.

Seems to me that in most cases the only time most resorts do any rentals of any significance is when they open new units and giveaway weeks to the exchange companies to get cheap rentals in to pitch to....isn't that where the idea of timeshare exchange came from (lack of options for owners if they couldn't visit every year) ?, and isn't the best form of exchange the cold hard cash one should be able to get from renting their unit out ? We get far more owners renting their units out through us than using them for exchange, even though theReef has a very high exchange "pulling power" with II.

Last... communication... just try and stop me... if you think I write too much, you should sit and try to get a word in while I talk

 

[Seaside]

I would think someone would check out the Hotel Licensing Board to see what is correct. Your sales people have told owners that they are "free" to rent out their units when they are trying to make the sale. Can you post a copy of what it says pertaining to this information in your By-Laws? Sounds like a "cut" is what comes into play here as there have always been owners that have rented out on their own.

 

[caribbeansun]

They are free to rent out their units as long as they get licensed independently by the licencing group which is not exactly something that would be done lightly - the wording in their advertising is technically correct however I would agree that the spirit of the message is misleading.

As to the "cut" part well again that's a matter of how it's read as well. As one of the owners that participates in the rental pool I can verify that what Tom is communicating regarding the resort's investment in advertising is correct and that the resort receives a percentage of the gross rental revenue to pay for their costs and perhaps some profit should they be successful in filling the resort. To that end leakage of dollars to contribute to that ad campaign costs all the other owners including myself.

FYI - I may have the distinction of being the first owner Tom stopped from advertising my own unit about 2+ years ago. I was mighty ticked off at the time but I think I've been drinking the Kool-aid too long as I've started to agree with him on this issue although I have to admit that when occupancy drops I start to wonder if the grass is greener...

Would I be hunting down individual TS owners, probably not. Would I want the person with 52 weeks of availability on Redweek in the pool - at this point I would probably say yes from a purely selfish perspective because I want to see the advertising succeed and get paid for as quickly as possible. Would I stop telling people they can rent their own week in my advertising literature - absolutely. Would I get the Q1 statements done rather than posting on TUG - yup

 

[Seaside]

Do these "laws" pertain to Castaway's Cove or to their Timeshare Units, or both. It is understandable at Castaway's Cove that management would want a cut, and they should get one. However, to rent out 1 week of timeshare and they get a cut on that? How would that be fair to the owners of those units. I reread Tom's explanation, and to me, it seems like he is talking in circles. I wish he would make it more "simple". Certainly there is a difference between Castaway's Cove Condo's and their Timeshare units. Thank you for your explanation.

 

[TomCayman]

Do these "laws" pertain to Castaway's Cove or to their Timeshare Units, or both. It is understandable at Castaway's Cove that management would want a cut, and they should get one. However, to rent out 1 week of timeshare and they get a cut on that? How would that be fair to the owners of those units. I reread Tom's explanation, and to me, it seems like he is talking in circles. I wish he would make it more "simple". Certainly there is a difference between Castaway's Cove Condo's and their Timeshare units. Thank you for your explanation.

No difference between the condos and the timeshare, just a matter of scale (number of weeks per owner).

I'll repeat that we aren't taking a cut, ALL the money goes into rental marketing...and will do for a while to come.

caribbeansun :
.....you won't need any koolaid when you see the latest rental numbers, suffice to say you'll be happy
.....sorry if I appear to be hunting down individual owners, not my intent (just took <3 minutes to fire some messages off when I got a listing alert from RedWeek), but we HAVE been advised that the practice of private rentals is being closely looked at by government.
....those messages took no time out of my day, but this thread is in danger of doing so (to your point about taking me away from doing other work for owners!), but I think it has served a useful purpose, though at this point most of what I could say has been said.
....as you noted that you feel we have sales people out there misrepresenting how owners can do their own rentals, I will look into that right away.

BTW, if anyone gets Caribbean Travel and Life magazine, lives in the Southern USA and gets USA Today on a Friday, or (soon) is on certain prominent websites, you'll see our advertising....and it's working... our rental numbers are up over 50% so far for this summer.

Does leave one thought.... for the owners who ARE participating in our rental programme with our expensive and aggressive marketing campaign to drive numbers..... aside from legalities, is it fair for other owners to sit out from that campaign and benefit from the marketing dollars without paying their share ?

 

[Seaside]

I believe you said that there was no "cut" in renting through you? So where are the dollars coming from for your marketing campaigns? Then it would certainly be fair for the Timeshare Owners to rent out on their own, they would get full value for their monies for renting, and the renter would pay the $10.00 US a day for the Government Tax that is imposed on all Hotels/Timeshares on the island. Either way, your resort would be taking a "fee" towards Marketing Campaigns, etc., which you said are very aggressive. It is not cheap to advertise in those publications, etc. Sounds like renting on Redweek, etc., is much more cost affective for those who cannot use their units and want to rent them out, to recoup their MF's and not have to pay a fee to the Reef Resort and their marketing. Would not benefit the owners, only benefits the Reef.

 

[TomCayman]

I believe you said that there was no "cut" in renting through you? So where are the dollars coming from for your marketing campaigns? Then it would certainly be fair for the Timeshare Owners to rent out on their own, they would get full value for their monies for renting, and the renter would pay the $10.00 US a day for the Government Tax that is imposed on all Hotels/Timeshares on the island. Either way, your resort would be taking a "fee" towards Marketing Campaigns, etc., which you said are very aggressive. It is not cheap to advertise in those publications, etc. Sounds like renting on Redweek, etc., is much more cost affective for those who cannot use their units and want to rent them out, to recoup their MF's and not have to pay a fee to the Reef Resort and their marketing. Would not benefit the owners, only benefits the Reef.

I'll try again.. there is no cut for the management company, the commission deducted from rental income is used wholly for the purposes of rental marketing.....which benefits the owners...who ARE theReef.... we (the management company) do not own theReef, we simply manage it FOR the owners.

 

[Kal]

...the vast majority of owners wishing to rent their unit do so through theReef, and that activity is what allows us to complete the circle :

owners participating in rental programme >​

marketing budget from rental commissions >​

renters paying to stay at the resort>​

good rental returns for owners >​

increasing number of owners in rental programme... etc​

This year alone we will spend cUS$1m in rental marketing for the resort, something that all owners renting their units benefit from. All funds required for this marketing budget from this come from rental commissions from owners in the programme...

I assume the rental program is NOT funded from maintenance fees. Therefore, what percentage of the gross rental proceeds go to the owner?

 

[Seaside]

Good question. Kal.... Tom, let's say that someone wants to rent out their week of Timeshare for $800-$1000, what would they actually be able to put in their pocket? You are still saying, Tom, that monies would be taken out. How would that benefit owners who may only want to rent out for a one time only deal? They would certainly do better on other rental sites. I do not personally think there is a way that you can convince us how wonderful it would be to be able to give a percentage of their rental back to the managing company to use towards Marketing.

 

[short]

Does leave one thought.... for the owners who ARE participating in our rental programme with our expensive and aggressive marketing campaign to drive numbers..... aside from legalities, is it fair for other owners to sit out from that campaign and benefit from the marketing dollars without paying their share ?

Well, you sort of had me agreeing with you up until this statement was made.

Its absolutely unfair to force owners to pay for advertising that they have no control over.

By the way, is the resort in developer sales yet and if so doesn't the developer get most of the benefit of renters who can be turned into interval buyers? Is the developer participating in the advertising budget or only the rental pool?

Short

 

[london]

Resort Management Commissions

We have found that most resort management companies charge from 20 to 30% commission on the gross rental for the week.

Also they do not guarantee that the week can be rented.

We usually bank the week, if for some reason cannot use it.

Sometimes we trade back into our home resort for a better time frame.

 

[Seaside]

Perhaps on The Reef Owner's website there could be an area for owners wanting to rent out their weeks, at no cost to them, just for owners wanting weeks and owners looking to rent out their weeks. I agree, why should someone renting out a week or two pay for excessive marketing strategies so the owner and management can benefit by promoting their resort, not only Timeshare, but also their condos. That does not make sense how it would benefit those who just own Timeshare and are not looking to upgrade or purchase more. I think in the long run, things like this turn people off. And it is bad publicity for the resort to have this being discussed on this thread.

 

[Kal]

...This year alone we will spend cUS$1m in rental marketing for the resort...

Follow the money! I'm curious what's the source of this $1M funding at the beginning of the year? Is it a loan which is to be reimbursed from rental proceeds during the course of the year? Are members of the Management Company salaried employees with sales commissions as an add-on?

 

[Seaside]

Perhaps someone else that works at the Reef Resort can give us more of an honest answer, instead of a whirlaround confusing answer to important questions.......

 

[Pit]

Oh, to Pit, the link you send is not relevant to this. The Cayman Islands Government (per the doc you linked to) charges a flat fee of US$10 per day for occupancy of a timeshare by an owner / guest / exchanger, BUT, if a property is rented (and it must be rented by a licenced operator), the charge is 10% of the rental value.

Tom, not only is it relevant, it discusses the specific law to which you made reference. If you read what I wrote, you will see that I simply restated what is in the document.

The tax is either 10% of the rental or $10/day, depending on how the guest is classified.

If the guest is classified as a renter, TAT = 10%
If the guest is classified as an owner, TAT = $10/day

From a legal standpoint, this one is pretty simple.. the value if provided through a stay in a property located in the Cayman Islands, hence tax is due and payable, so of course the Cayman Islands government has such authority.

If I visit the US / UK and buy a product for export, I don't have to pay sales tax / value added tax....but if I pay for a service actually utilised in that country, naturally I have to pay the appropriate tax...and that includes hotel taxes.

Enforceabilty is one thing, but authority is without question.

Your post above completely misses the point. Steve was not suggesting that TAT can be avoided. His point was that one need not be licensed by the Cayman government in order to conduct rental activities in the US. The Cayman goverment has no jurisdiction over rental activities on Redweek. They have jurisdiction over you, because you operate from there.

Does leave one thought.... for the owners who ARE participating in our rental programme with our expensive and aggressive marketing campaign to drive numbers..... aside from legalities, is it fair for other owners to sit out from that campaign and benefit from the marketing dollars without paying their share ?

The tone of this statement makes perfectly clear what's going on here. I see nothing more than a management company looking after its own interests - attempting to coerce owners into the resort's rental program through misinformation.