TimeSharing Today | Sep / Oct , 2024 Page 44
RESORT SOURCES
Deferred Maintenance :
Understanding the risks and solutions for timeshares
By Scott MacGregor , Chief Operating Officer , Lemonjuice Solutions
Deferred maintenance refers to the postponement of necessary repairs and upkeep of property , often due to budget constraints or other priorities . For timeshares , deferred maintenance leads to significant long-term issues , impacting safety and financial well-being .
Throughout my 40 + years in operations , I ’ ve seen well-meaning Boards mistakenly defer maintenance , hoping that next year would bring better financial circumstances . Unfortunately , that better year has never arrived for many , leaving many resorts facing tough , often painful decisions .
Causes of deferred maintenance
The obvious answer for deferring maintenance is simple – inadequate funds . This may seem apparent , but the reason that timeshare resorts lack the necessary funds to take care of their resort is a more complex answer . Deferred maintenance is a long-standing issue that initially began taking hold years ago for many timeshare resorts .
When timeshare resorts were thriving , timeshare developers began ceding control of their timeshares to volunteer boards primarily during the late 1980s and 1990s . For the most part , the resorts were financially solid enjoying a robust ownership base , resales were relatively easy , and the internet and advent of online travel agencies and likes of Airbnb were simply non-existent . The times were good – owners paid their maintenance fees , and renters booked directly with a simple phone call or form .
But then 2008 brought us the Great Recession , frozen capital markets , and board-managed timeshares faced a surge of non-paying owners . Meanwhile , online booking became the norm and the internet brought disruption to the leisure rental markets .
Board-managed timeshares now had to compete in an environment that many were ill-prepared for and adjusting and competing for rentals Boards had to adjust as quickly as possible to compete and many resorts were slow to react .
Beyond the 2008 financial crisis and the disruption the internet brought , poor planning , and inadequate funding reserves were commonplace . Plus the culture and
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strongly held belief that the best way to keep owners happy was to keep maintenance fees low .
This ingrained thinking only added to the problem of not having enough money to fund necessary repairs and updates . While the boards ’ hearts were in the right place , unfortunately , keeping the maintenance fees artificially low so owners could continue to use the property at a “ bargain ” has contributed to today ’ s problems laying the foundation for today ’ s special assessments .
Unfortunately , the lack of a clear maintenance schedule and a well-funded reserve has led to very tired resorts that are not attractive to many leisure travelers . These things mixed with a short-term focus where associations prioritize only immediate needs or visible improvements over essential ( think structural ) projects have resulted in significant problems and unsafe resorts .
Deferred maintenance risks
Increased Costs – Postponing maintenance often leads to more damage and higher repair costs . For example , a small roof leak left unattended can cause struc-