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OUR APOLOGIES FOR THE LENGTH OF THIS LETTER WHICH CONTAINS A PROGRESS REPORT ON SELECTION OF OUR NEW MANAGEMENT COMPANY AND INFORMATION CONCERNING AN UPCOMING OWNER ADVISORY VOTE ON TERIMNATION OF OUR HYATT VACATION CLUB RESORT AGREERMENT. WE THANK YOU IN ADVANCE FOR TAKING THE TIME TO READ CAREFULLY.

Dear Grand Aspen Owners,

In this letter your Board reports on the termination of our Management Contract and on our progress and timeline to select our new management company.

We also advise you will receive on August 12, 2021 a Notice of Association Special Meeting to be held on September 3, 2021 with a Ballot providing each owner the opportunity to cast an advisory vote in favor of or against terminating the Hyatt Vacation Club Resort Agreement (Club Agreement).  

We discuss below our reasons to consider voting in favor of terminating the Club Agreement, and we urge you to contact any Board member should you have questions or wish to discuss the Club Agreement or our reasons in favor of terminating.

Management Contract

At the July 13,2021 Association Special Meeting 86% of owners voted 98% of their intervals (excluding Trust and Developer intervals) to authorize termination of the Management Contract. As well, on July 13 your Board authorized the Association to deliver notice of termination effective December 15, 2021.

Since July 13 we have sent our Request for Proposals (RFP) to five qualified management companies and have met at our property with four of them. We have received two preliminary proposals, each with a proposed management fee half our current fee which translates into an annual savings of $400,000. Final proposals are expected in mid-August, and the Board plans to select two semi-finalists and conduct in-person meetings in Aspen before Labor Day.

Our goal is to select our new management company by mid-September, and with a December 15 takeover date, our new management company will have time to execute a smooth, orderly transition in advance of the Holiday Season. The Board’s goal is for all key personnel at our property to be retained by the new management company.

We thank all owners for your participation in this process and especially for your overwhelming support authorizing termination of the Management Contract.

Hyatt Vacation Club Resort Agreement

As provided by Colorado law, the Association has the right to terminate the Hyatt Vacation Club Resort Agreement (Club Agreement) without penalty on not less than 90 days’ notice.

Although neither the Club Agreement nor our governing documents requires owner authorization to terminate, your Board has called a Special Meeting of the Association to provide every owner an opportunity to cast an advisory vote in favor of, or against terminating prior to any Board action.

Reasons why the Board may authorize the Association to terminate the Club Agreement are set forth below.

You will soon receive email notice of an Association Special Meeting on September 3, 2021 with links to the Meeting Agenda and an electronic Ballot. We ask every owner to cast his/her Ballot to provide your advisory vote to your Board.

REASONS TO TERMINATE THE CLUB AGREEMENT

This section expresses the opinion of all Board members, except Charles Baron, who is an executive of our Management Company and is the Developer/Declarant appointed member of the Board.

  1. CONTRACT HISTORY
  • The Club Agreement was entered into in December 2005 prior to   property opening and was signed on behalf of the Association by an executive of our management company, one of the parties to this contract.
  • In 2005 your Association and its Executive Board were controlled by the Developer; Owner control of our Board commenced in late 2013.
  • Prior to the Association signing the Club Agreement in 2005, independent legal counsel was never engaged by any Hyatt affiliate or the Developer to represent and look after the interests of our Association and its future members (interval owners), whose interests were thus never protected.
  • FLOATING WEEKS PROGRAM ISSUES

                With respect to the Club’s Floating Weeks program, the Board is of the opinion:

  • The design of the program is defective as there is not nearly enough quality float time to meet the demand and reasonable expectations of owners of 1,049 Fixed Weeks.
  • The Club Points program and reservation system is too complex; as a result, too many of our owners elect not to participate and do not use their annual allocation of Floating Club Points.
  • The Floating Club Points reservation process the first Saturday in January is best described as a “scrum” with many owners unable to compete effectively for quality Floating Weeks during our Home Resort Preference Period.
  • For all of these reasons, our Floating Week program is neither fair nor equitable to our community of 509 Fixed Week owners and is a source of substantial dissatisfaction for many owners.
  • As well, because the Floating Week program is not understood by a large portion of the Aspen real estate community, very few Aspen real estate brokers are comfortable to present our intervals to potential buyers, which contributes to poor demand and depressed values.
  • By comparison, Residences at the Little Nell and Dancing Bear Aspen have fractional ownership with easily understood float programs, and each of these independent properties has experienced appreciation in the value of their fractional intervals.
  • CLUB PROGRAM INEQUITIES

Based on personal experience and conversations with owners over the years, your Board is also of the opinion:

  • Most Aspen owners of Fixed Weeks are Aspen centric and paid a very substantial         premium for their intervals specifically and only for Aspen use time as compared to other Club members who paid substantially lower prices for intervals at other Club properties and often seek to use their Club Points to reserve Aspen Floating Week time.
  • Most Aspen owners do not use Club Points for reservations at other Hyatt Residence Club properties, for reservations using Interval International, or for exchange into World of Hyatt hotel points. Most Aspen owners make best efforts to use Club Points for Aspen Floating Weeks or do not use them at all.
  • Consider if Club Points are important for an Aspen Owner, a Week 35 two bedroom interval at Hyatt Beach House Resort in Key West has an asking price of $3,000, a 2021 assessment of $1,440, and a value of 2,200 Club Points which is the same Club Point value as a much more expensive Aspen two bedroom interval and thus a much cheaper option for Club Points to reserve at other Club properties, to use for Interval International, or to exchange into World of Hyatt hotel points.
  • The Club Agreement assigns nominal point values to six of our off-season weeks (Mountain Season) resulting in close to 100% occupancy during this time. Our property is used almost entirely by Hyatt Residence Club members from other properties or by Portfolio Club members who have exchanged their Portfolio Club points for our Club Points to secure Mountain Season reservations.
  • Specifically, during Aspen’s Mountain Season a 3BR unit can be reserved for 235 points which is only 10% of the points required during Platinum Season. Mountain Season is a give-away to non-Aspen Hyatt Residence Club members and Portfolio Club members, providing cheap access to our property. This “carrot” (cheap access to Aspen) has been used to market and sell intervals at other Hyatt Residence Club properties and Portfolio Club points.
  • The ratio of non-Aspen Hyatt Residence Club members and Portfolio Club members using our property, as compared to Aspen owners using other Hyatt Residence Club properties or Portfolio Club inventory, is lopsided and adverse to our interest, and during Mountain Season, Aspen owners foot the entire bill for operating expenses and related wear and tear.
  • The Hyatt Residence Club, without any required Member or Association approval, entered into a Club-to-Club Exchange Agreement with its affiliate’s Portfolio Club which provides for one-night stays at our property. Such use is inconsistent with the promised use of our property as a “residence club” which our owners were sold and bought. Hyatt Grand Aspen is a residence club and not a hotel.
  • Finally, the Hyatt Residence Club has twice exercised its right (what it unilaterally determines is in the best interest of members as a whole) to re-rate point values of certain properties (specifically Florida and Carmel), which results in Florida and Carmel owners having more Club Points to reserve Aspen Floating Weeks and Aspen owners being required to pay more Club Points for reservations at Florida and Carmel properties.
  • COST
  1. The Hyatt Residence Club Fee paid in 2021 by Aspen owners was $327,540, and under the Management Contract the management company charged a 15% management fee on top of the Club Fee, an additional $49,000. Despite our Board’s objections, the management company has charged the 15% fee annually.
  • In addition, every owner pays Hyatt Residence Club website transaction fees such as $41 for certain reservations, $51 for cancellations and $30 for guest certificates.
  • All in, the Board estimates Aspen’s 2021 cost for the Hyatt Residence Club is between $450,000 and $500,000.
  • THE BOTTOM LINE

The Board is of the opinion that the design of Aspen’s Floating Week program is defective and too complex and unworkable for many owners; is not understood by most Aspen real estate brokers; is expensive; and facilitates overuse of our property. All of this is adverse to our interest, and if you share your Board’s opinion, ask yourself why our property should be a Hyatt Residence Club property, why our Owners should be members of the Hyatt Residence Club, and why our Association should be a party to the Hyatt Vacation Club Resort Agreement.

Of importance, termination of the Management Contract will reduce cost by approximately $400,000, and termination of the Club Agreement will reduce cost by approximately $500,000, a total savings of almost $1,000,000!

OUR VISION: A NEW, IMPROVED, MORE EQUITABLE FLOAT PROGRAM

  • If the Club Agreement is terminated, our Association is required to establish new reservation procedures for use of the Condominium, which may be different from those set forth in the Club Agreement.
  • The right of Owners to secure one week + one split week of float time is inviolate, provided for in our deeds, and will not change.
  • Your Fixed Week intervals are your property in perpetuity and no reservation would be required each year to reserve Fixed Weeks. This is contrary to the Club Agreement which requires Owners each year to reserve (or lose) deeded Fixed Weeks.
  • The current Floating Club Point system and the seasonal designations would be eliminated.
  • The “Land Grab” which takes place the first Saturday in January would be eliminated, and a new reservation process would be adopted which is stress-free and fair and equitable for all owners.
  • Access to Aspen float time by members of the Hyatt Residence Club and by Portfolio Club members who exchange Portfolio Club points for Hyatt Residence Club points would cease. As a result, our owners would have substantially more (hundreds of weeks more) available float time and our operating costs would be reduced.
  • Approximately $500,000 of Hyatt Residence Club dues and fees would be eliminated as our new float program would have no dues or transaction fees.
  • Any unreserved Float Weeks would be made available to owners in a program similar to our old Developer Rate Program which was discontinued several years ago.
  • A draft of a new, proposed float program would be circulated first for owner comment before adoption.
  • Please note termination of the Club Agreement means our property will not be a Hyatt Residence Club property but will be independent, and our owners may then consider association with another exchange or reciprocity program which provides access to other luxury, residential properties.

SUMMARY

As provided by Colorado law, the Association has the right to terminate the Club Agreement without penalty on not less than 90 days’ notice.

As set forth above, your Board is of the opinion we can do much better if we terminate the Club Agreement. As an independent property our Association would have control and the ability to develop programs that are, first and foremost, in our owners’ collective best interest.

You will shortly receive Notice of a Special Meeting of the Association on September 3, 2021 providing each owner an opportunity to cast an advisory vote in favor of or against terminating the Hyatt Vacation Club Resort Agreement.

Your Board urges every owner vote and requests you contact any Board member should you have any questions or wish to discuss the Club Agreement or any of our reasons to vote in favor of terminating.

On behalf of the Board,

Robert H Weisman,

President

Board Members and Owner Director Contact information

Laurie Aronson (Owner) – aronson@lipseys.com

Charles Baron (Marriott Contractual Appointed Member of the Board)

John Brilbeck (Owner) – johnbrilbeck@comcast.net

Al Kenney (Owner)- al@bluewaterfractionals.com

Allan Sheres (Owner) – all@jerig.com

Bob Weisman (Owner) – weisman@greatwatercapital.com

SPECIAL MEETING OF MEMBERS OF G.A. RESORT CONDOMINIUM ASSOCIATION

HIGH IMPORTANCE – PLEASE READ

Dear Grand Aspen Owners:

This letter is the most important the Board has sent to our owners since the opening of our property in late 2005. We request you read it carefully and we request you call or email any director with any comment or question.

 In 2018, with the passion and leadership of director Paul Freeman, owners initiated the process of establishing owner control of our Board, which was accomplished, and owner control of our resort property. Paul passed away in January 2021; however, his vision for owner control of our property may now be realized and will be determined in July at a special meeting of Association members (owners).

The issue for owner consideration and vote is whether to authorize the Association to terminate the Management Contract. As provided by Colorado law, the Management Contract and our governing documents, the Association may terminate the Management Contract with the approval of our Board and owners.

The reasons the Board requests owners to authorize the Association to terminate the Management Contract are set forth beginning on page 2 of this letter.

Please note the Management Contract is NOT the Club Affiliation Agreement which provides for our resort property to be a component resort of the Hyatt Residence Club, our points based system and our fixed and float reservation rights.

The Management Contract is also NOT the Club to Club Exchange Agreement which enables Portfolio Club members to access our legacy points and thus our float inventory and to book one night stays (which smacks of a transient hotel property and not a residence club).

On Friday June 18th, you will receive email Notice of Special Meeting of the Association Members of Grand Aspen Resort Condominium Association to be held at the Hyatt Grand Aspen on Tuesday July 13th at 11:00am MDT. Voting will be conducted online and your voting credentials will be included with instructions about the voting process. This is the same, easy process with which you are familiar having been used for voting for all recent annual meetings.

Because email correspondence with owners sometimes ends up in an owner’s spam mail, if our email is not in your inbox on June 18th, please check for our email in your spam mail.

All owner directors wholeheartedly support termination of the Management Contract, and we ask all owners to vote each of your intervals as we are seeking approval of a super-majority to authorize the Association to terminate this contract.

REASONS TO TERMINATE THE MANAGEMENT CONTRACT

  1. CONTRACT HISTORY
    • The Management Contract was entered into in 2005 prior to any interval sales and the opening of our property and was signed on behalf of our Association by an executive of the management company, the other party to this contract.
    • Prior to signing the Contract, independent legal counsel was never engaged by the Developer or the Club to represent and look after the interests of future interval owners and their Association, whose interests were thus never protected.
  2. CONTROL OF OUR PROPERTY and OPERATIONS
    • The Management Contract provides “the management company, to the exclusion of all persons including the Association and its members, shall have all the powers and duties of the Association as set forth in the Condominium Documents” (emphasis added), a complete delegation of powers of our Association (and the Association’s Executive Board).
    • The Board feels the Management Contract provision quoted above provides the management company with overly broad, virtually exclusive control over nearly every aspect of our property and its operations.
    • After Hyatt sold the Hyatt Residence Club to ILG in 2014 and after ILG was acquired by Marriott Vacations Worldwide in 2018, each has exercised and maintained such control.
    • Whether it is, for example, our desire to distribute interval ownership and sales information in our lobby (blocked by Management), our design for renovation of our lobby (approval of Management required), our desire to provide incentive compensation to valued associates during the pandemic (blocked by Management), or our participation in the hiring of our general manager (none requested or permitted by Management), the management company exercises total control of core decisions which should be solely under the control of the Association and its Board.
  3. EXCESSIVE MANAGEMENT FEE
    • The Management Contract provides a non-negotiated management fee of 15% of the Association’s annual operating budget, higher than other Hyatt Residence Club properties and substantially higher than a negotiated market rate for independent, highly qualified management. The 2021 fee was $800,000 and will increase annually as operating costs increase. The management company rebuffed efforts by your Board to negotiate a competitive market rate.
    • The personal obligation of each owner to pay Club Dues was unilaterally changed in 2005 to an Association obligation to pay Club Dues on behalf of all owners. As a result, Club Dues have each year been included in our operating budget, and Marriott’s management company has collected a 15% management fee in addition to and on top of Marriott’s Club Dues costing owners since 2005 over $700,000. The management company also rebuffed efforts by your Board to discuss, let alone, to change this.
    • The Association has received a confidential proposal from a highly qualified, independent management company proposing a management fee of half the current 15% rate. Had such a competitive rate been in effect since 2005, owners collectively would have had their assessments reduced by approximately $5,000,000.
  4. EMPLOYEES
    • All employees at our property are employees of the management company and not the Association; as such, during the pandemic the management company refused to allow the Association to provide additional compensation and/or incentives to valued associates, some of whom had been furloughed or had reduced hours of work.
    • With Vic Giannelli’s resignation after 16 years of service as our property’s first and only General Manager, the Association was unable to participate in the hiring of our new GM. The Association had no ability to interview candidates or to set compensation at the level required to attract the most qualified replacement for Vic.
    • Marriott eliminated any housing allowance for its properties system-wide (ignoring housing expense in markets such as Aspen) and set compensation for our new GM in line with its other properties. As a result, our new GM will be living in New Castle, 13 miles west of Glenwood Springs and 54 miles from our property. Just think of the potential ramifications with that commute, especially in the winter season.

NEW MANAGEMENT PROPOSAL AND CRITERIA

The Association has already received its first proposal from a highly qualified, motivated, and independent management company and is seeking additional competitive proposals. The Association will control the selection of our new management company, approve the hiring of key personnel, and set high performance standards.

Our new management company will be required to provide superior services, exceeding the quality of Marriott provided services, with a goal to make our property one of the most desirable in Aspen, while lowering the cost of ownership.

SUMMARY

A “yes” vote is a vote to take back control of our own property!

  • As you consider your vote to authorize the Association to terminate the Management Contract, ask yourself whether, if you had fully understood that Contract provided the management company (and not your Association) with complete control over our property and its operations, you would have bought your intervals and paid premium prices.
  • Also, ask yourself whether new, highly qualified and motivated, independent management working only for our owners and Association, and not for Marriott, will  deliver the high quality services and amenities owners want and at lower cost.
  • The Association expects to have several quality proposals for new management, and with your Association in control, a decision in the best interest of all owners will be made.

Your Board requests every owner vote each of your intervals to authorize the Association to terminate the Management Contract.

If you are considering not voting or voting not to authorize the Association to terminate the Management Contract, we ask you to please communicate first (preferably a direct conversation) with any Director. Please note a failure to vote is the same as a vote notto authorize the Association to terminate the Management Contract.

On behalf of your Board,

Robert H. Weisman,

President

Owner Director Contact Information

Laurie Aronson (Owner) – aronson@lipseys.com

John Brilbeck (Owner) – johnbrilbeck@comcast.net

Al Kenney (Owner) – al@bluewaterfractionals.com

Allan Sheres (Owner) – allan@jerig.com

Bob Weisman (Owner) – weisman@greatwatercapital.com