Today we look at maintenance fees in greater detail. The name clearly indicates that this fee is for the maintenance of the resort, so what does this involve? Although not extensive, logic dictates that the following all come under the generic title of “maintenance”.
- Fixtures and fittings.
- Gardening.
- Renovation.
- Cleaning, including apartments, pool, common areas etc.
- General upkeep.
- Salaries associated with the above.
Naturally this list is not exhaustive but in general these are the areas one would expect to be covered. As a timeshare owner you would anticipate all the above and possibly more to take place in order to justify the fees, and for the most part they do. The question is, do your fees represent value for money and does it take your entire payment to pay for these services? Let’s take a look.
The numbers
Taking a view of a single resort, Anfi, who have been in the news recently for nefarious reasons, have an estimated 33,000 families as owners since they opened in 1992. Taking an average maintenance fee of €900 per annum, this results in a possible annual income of €29,700,000. Admittedly there will be defaulters but the effect on the bottom line will be minimal. The question we pose is “can it be possible for this resort to spend nearly 30 million Euros (£28 million) on resort maintenance?” Of course not. So where does the money go?
Profit or loss?
It’s clear to see that when a resort is selling inventory the profit margins against the development costs are very lucrative covering the initial expenditure several times over. In the heyday of timeshare, resorts sold out of inventory rapidly, nowadays timeshare is not selling in anything like the volumes of the past, so one has to question how the developers and resorts make a profit, well it’s plain to see that profits are generated by the surplus monies left after the true costs of resort maintenance is taken into account.
Royal Park Albatross
We recently reported on the possible sale of Royal Park Albatross in Tenerife. In timeshare terms this is a relatively small resort with only 160 apartments, that said it still means that there could be as many as 8,000 weeks to sell (even more in points). Using the same maths as above, the potential annual maintenance fee income could be as high as €7,200,000. Again can it possibly cost this amount to run this relatively modest resort?
Taking this argument to the upper limits, with the merger of Hilton Grand Vacations and Diamond Resorts this creates an ownership base of 725,000 approx. According to the American Resorts Development Association (ARDA), the average maintenance fee for timeshares in 2019 was $1,000, no doubt more in 2021/22.
If each owner pays $1,000 annual maintenance then the figures are a staggering $725,000,000 annually, no mere bagatelle. No wonder according to the contents of the 2021 SEC (Securities and Exchange Commission) report of the Hilton AGM , the CEO of the company, Mark Wang, has a declared remuneration of $6,175,000.
Conclusion
Maintenance fees are the bane of owning a timeshare, given they always seem to go up, often by many times the rate of inflation. Couple this with seemingly no explanation of the actual expenditure used to “maintain” the resort, this naturally raises questions.
The general consensus of owners is that year on year, apart from a few semantics, resorts and facilities remain the same with no large improvements or major expenditure evident. In this case, where does all the money go? Given the above we will leave you to decide.
It is fair to expect that management fees exist, after all the resort cannot maintain and run itself. It is also fair to expect these fees to rise in line with the rate of inflation. However, what does not seem fair is when consumers are taken advantage of by charging maintenance fees that rise way above the expected rate of inflation with no explanation of income vs expenditure.
Taking aside the financial aspect of where your maintenance fees go, as we stated above, new timeshare sales are on the wane, perhaps the now reliance on these fees to keep the developer/resort afloat may go some way to explaining why it’s often extremely difficult to exit your ownership.
The only way to avoid maintenance fees is not to own a timeshare. Any time now the 2022 demands will arrive, if they haven’t already and whether you like it or not these fees must be paid or else. We recently published an article on the “or else” scenario which may be viewed here.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk