By: Steve Young
As with any disruptive technology or market shift, the optimistically unwary seem to wake up painted into a corner with little hope of coming out unscathed. Similarly, resorts in this boat may find themselves in various predicaments. Some are debt-heavy with not enough clout to maintain the amenity level needed to sustain rentals. Some may have lost resale market advantages. And there are those that are behind the renovation curve with owners that are unwilling to make the necessary sacrifice, or an HOA board that does nothing in fear of exasperating problems.
If any of this seems familiar, it is time to see where the carrot of economic recovery is leading you and acknowledge that any kind of silver lining is reserved for those with the tenacity to ask the tough questions and then make the right course of changes.
Some of the questions that should be asked are:
- Do you have a marketable location that can be leveraged?
- What is the current cash-flow value of your dependable paying owners?
- Are you offering what owners and guests expect from a modern-day resort?
- What are your rental and resale possibilities?
- Do you have the business capability to sell and recycle inventory?
- Are you able to leverage owner delinquency and bad debt into your rental or resale program?
- Do you have a good relationship with a major exchange organization, club or developer?
- Can you assess maintenance fees at a level that meets annual operations and long-term refurbishment needs?
- Are your owners willing to pay more for future improvements?
- Are your board members knowledgeable and willing to make the tough long-term decisions necessary to keep your resort viable? Selling outright, converting to a whole-owner operation or even adapting the property into a hotel may need to be considered.
- When change is needed, are board members able to produce an objective analysis of the costs and benefits and make the necessary unbiased decisions?