FEE INCREASES
One of the most frequent complaints among owners is the rapid increase in fees in recent years. Maintenance Fees and Housekeeping Fees have been increasing at alarming rates. Of course the cost of maintaining our resorts is going to increase over time -- that is unavoidable. The problem is the sudden and dramatic increase when Cendant (now Wyndham) took over management, and the lack of supporting documentation to owners. If the manager tells the Board that a fee increase is needed, the Board must ask for the data behind the decision. Raising fees because the Club's income no longer covers the costs is justified; just show us the justification!
The management agreement is structured so that Wyndham's fee is all profits from Club operations, up to a max of 15% of expenses. That means that anything Wyndham does to increase Club income (raising housekeeping fees, maintenance fees, and Bonus Time charges, for instance) directly increases their profit.
Housekeeping Fee increases
Take a look at the pattern of housekeeping fee rates over the last ten years (I do not have data prior to 1999). Remember that Cendant/Wyndham bought Trendwest in 2002.
Since Cendant/Wyndham took over seven years ago the rates have increased an average of 56%. That is an average of 8% per year! How long has it been since we had 8% annual inflation? And it is worse than it looks. That average of 56% includes unit types that did not exist prior to 2003, so had no "base line" to increase. If we look only at unit types that existed prior to 2003 (and were therefore raised in 2003) the 7-year average increase jumps to 68%, or 9.7% per year! Have the costs of cleaning condos really increased 10% per year for the past 7 years? We don't know. The management company says "we need to raise housekeeping fees", so the Board does it. Owners have never been shown the hard data to support the need for the increase.
Maintenance Fee Increases
The increase in Maintenance Fees is not quite as blatant as the Housekeeping Fees. That is because our Governing Documents do not allow the maintenance fees to be raised by more than 5% per year. But as with housekeeping fees, the issue is HOW and WHY they are raised. Management tells the Board that they need an increase, and the Board approves it. What is that increase based on? In my profession, when I increase the annual assessments on condominium owners I have to give them detailed documentation showing them exactly WHY the increase is necessary.
Here is the graph of the maintenance fees on a 6000 credit account over the past 15 years:
The total increase from 1994 to 2002, under Trendwest, is 13.33% or an average of 1.67% per year. The total increase from 2002 to 2009, under Cendant/Wyndham, is 36.08%, or 4.51% per year.
Did our Board of Directors ask for the supporting data for these increases? We don't know.
