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.
- 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.
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.
- 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 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
