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
- 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.
- 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.
- 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.
- 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