You may view the video presentation or read the following translation.
The information today is about the 2015 annual homeowners meeting for the Westin Kaanapali Ocean Resort Villas. The reason I attended this meeting is because I like to stay abreast of what is taking place at the Westin Kaanapali Ocean Resort Villas in terms of improvements and other information that they can share with us. Also, Starwood recently announced that the hotel portion of their portfolio is being sold to Marriott and their timeshare portfolio is being sold to a company called Interval Leisure Group or sometimes abbreviated as ILG.
The meeting was attended by all 5 Board members of the Westin Kaanapali Homeowners Association, the Resort Manager and staff, including Angela Nolan, as well as Directors and Managers from each of the departments at the Westin Kaanapali Ocean Resort Villas. In addition, there were some members from Starwood’s offices in Orlando that attended the meeting and approximately 20 owners as well.
The meeting lasted about 3 ¾ hours and I would like to summarize my report here.
First they talked about the financial status of the property. The annual rate of maintenance fee increase from 2015 to 2016 has been 3.3% and the largest portion of that increase was for property taxes. I’ll get back to that in a minute but first I’d like to give you an update on what is going on with the refurbishment that is and has been taking place.
Westin Kaanapali Ocean Resort Villas North Refurbished Studio Kitchen
The refurbishment in the South Villas started with roof repairs, there is new carpet in the units, new sleeper sofas, dining room table and chairs, living room lounge chairs, blackout curtains, Heavenly Bed, lamps, light fixtures, bedroom chairs, all the kitchen appliances have been replaced as well as washer/dryers in the units, along with new carpet in the hallways being installed. Building 2 has been completed. Building 3 refurbishment will begin in April 2016 and then they will move onto Building 4. They continuously do improvements to these properties every year on the exterior as well as the interiors.
Now, getting back to the increases and the maintenance fees – the rate of increase has been about 3.3% from 2015 and 2016 with the largest rate of increase being in the property taxes. The other component in maintenance fees is utilities with utility rates in Hawaii being some of the highest in the United States. So, in order to bring those costs under control micro-turbine generators are going to start being installed in April, 2016 and 90% of the energy the resort uses will be coming off these micro-turbine generators and the resort will be less affected by local energy rates.
As far as what happened in the meeting, a majority of the questions were brought up about the maintenance fees since they purchased. Some of the owners said since they purchased in 2003 and 2002 the maintenance fees were approximately $1,200 for a two bedroom unit and now the maintenance fees have gone up quite a bit and they asked for an explanation of that. Starwood acknowledged that they had under-estimated the annual costs of the maintenance fees in the beginning. Also that Starwood had subsidized the maintenance fees and then together with higher energy costs in the last decade as well as higher delinquencies in maintenance fees was what resulted in the cost rate of increase in the last decade.
They also noted that in the last five years since 2011 and 2016, the annual rate of increase has been at the rate of 2.0%, so they have brought these costs under control.
Since I am not an owner at Westin Kaanapali Ocean Resort Villas, I asked an owner, who is also a client and friend of mine to ask the following three questions:
- What will happen to the inventory that Starwood has acquired and currently owns through their right of first refusal option as well as inventory they have acquired through foreclosure s as to whether this will go with the sale to the Marriott in the hotel portion of the portfolio or will it go with the sale of the timeshare portfolio to Interval Leisure Group. The answer: The inventory that they have acquired through the right of first refusal option as well as through foreclosures will go with the timeshare portfolio sale to Interval Leisure Group. Interval Leisure Group timeshare portfolio will be a wholly owned subsidiary of Interval Leisure Group.
- The second question was regarding the name brand of Westin. And since this sale is taking place, what will happen with the name and will the name of Westin still be used. The answer: There is an 80 year licensing agreement so the name Westin will stay even after the sale has taken place and the inventory goes to Interval Leisure Group. So I was very pleased hearing that!
- This question was about the right of first refusal option and whether this will continue when the timeshare portfolio has been sold to Interval Leisure Group. The answer: Yes, they will continue to exercise their right of first refusal option and they will have their right to do that.
Overall, I was very pleased with the meeting and I had the opportunity to meet with the finance person and I asked him about the current litigation that is taking place with the County of Maui regarding the taxes. He said there are two components to the taxes – one is the assessed valuation of properties and he acknowledged that while the assessed valuations of properties in Maui have gone up, there was no justification for the millage rate to go up and that is what the litigation is about. They are disputing the millage rate.
Finally I was very pleased with the meeting, the progress that has been taking place and the improvements that they have been doing in each of their departments and how they continue to keep the resort in good condition and provide the services to the owners. So overall I was very pleased with it and I’m also pleased that the Westin name brand will stay with the Westin Kaanapali Ocean Resort South and North Villas for another 80 years!
I hope this information has been beneficial to you.
Syed Sarmad, Principal Broker for Advantage Vacation
