Vacation Homes/Resort fees

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Question
QUESTION: Hi Jan,

I owned a couple of condos at a ski resort. There is a rental manger that rents approximately 60% of the units. Their cut of the rent is 35%. Recently, they start to charge and collect a $35 resort fee for each rental. Rentals vary from 2-7 days. I estimated that they have 750-100 rentals per year. The fees to maintain the resort are paid by the condo owners in the common charges.There are 100 units. I believe this fee should not be charged. If charged then the homeowner's association should receive the resort fee. There is nothing in the bylaws which addresses this issue. What is your opinion?

ANSWER: Hi, John,

I understand your position. It would be interesting to know what the management company's position is regarding why they started charging the resort fee, and what they say that the resort fee is for. If they are like most hotels and vacation rental companies, the resort fee is designed to help cover some expenses and/or costs of doing business. Most hotels, resorts, and vacation rental companies charge a resort fee, reservation fee, or a processing fee that is designed for this purpose. It costs a certain amount for the company to be in business, and they must recoup their costs in some way or another. If the company did not charge the resort fee, they would most certainly need to raise the commission they are charging. You do not say specifically that the resort fee is being charged to each guest, but I am assuming that that is what you mean. Assuming that this is correct, you will note that the management company has structured a way to charge some of their costs of doing business to the guest as opposed to the owner.  

I just booked a stay at a resort hotel in Las Vegas. I noted that a resort fee was added to the per day charge for my room. The explanation on my confirmation is that this fee is for the free wireless service, free access to the fitness center, and several other amenities, some of which I will use while I am there, and some I will not. However, I recognize that it costs to provide these amenities, and that that cost has to be covered, one way or another. The hotel could have raised my room rate to cover them, or they could charge each guest individually as they use the amenities. Each resort owner and/or management company must decide which way they are going to cover their costs. Many are doing it these days through the use of a resort fee.

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QUESTION: Jan,

The resort fee is being charged to the room. The same fee is being charged for a studio or 3 bedroom room per reservation.if the reservation is 2 or 7 nights, the same fee is being charged. I do not have an issue with them charging a reservation fee or if they want to call it something else. I believe that when you call it a resort fee that they are implying that the money is being used for the upkeep of the pools, jacuzzis, health club, racquetball court, picnic area and free wifi. They do not contribute anything for the upkeep of these amenities. These amenities are paid by the owners' common charges.

They began charging this fee after another resort in town start to charge the fee. It appears to be purely another income stream for them. The rental manager pays the owners association a 5% fee of the gross rental revenue which is basically their rent. They do not pay the association any other fees. The new resort fee would basically cover their "rent".
I reviewed the bylaws which states that the recreational unit owner can charge owners and guests a fee for using the recreational unit. The owners purchased the recreational unit approximately four years ago. Upon opening the recreational unit, a resort fee was discussed with the money going back to the association. The rental manager vehemently refused to collect this fee. It was decided at that time that no fees would be collected for use of the facilities.

I believe that if a resort fee is being collected that the money should be returned to the Association. Please let me know if you agree. I am going to discuss this matter with the condo board.

Thanks,

John

Answer
Well, as I stated previously, it is difficult to render an opinion about the fairness of the fee without heaing from the management company as to what their thinking on the issue is.  As you stated, the management company is apparently using the resort fee to cover their rent back to the HOA, and as long as there is nothing in the bylaws to prevent that, it would seem that the management company is within their rights to do that.  I recommend that you express your concerns to the HOA, and that the HOA, if they share your concerns, that they discuss it with the management company.

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Jan Leasure

Expertise

I can answer questions about the ins and outs of vacation home ownership and the rental of vacation homes. I have managed residential rental property since 1983, both for myself and for others. I have taught property management and provided seminars and training at the local, state and national levels.

Experience

I am a licensed real estate broker in California. I have managed vacation homes for myself and for others for over 25 years. I currently am the managing broker at Monterey Bay Property Management.

Organizations
I am a member of the National Association of Realtors, the National Association of Residential Property Managers, and the Vacation Rental Managers' Association, among others.

Publications
Articles I have written currently appear at www.CaliforniaLandlordSolutions.com and have appeared in a number of real estate and property management publications.

Education/Credentials
Bachelor's degree, two masters' degrees, and most importantly, the School of Hard Knocks!

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