Opinion: Another blow (Diamond Resorts)

POSTED: 07/11/11 12:50 PM

Diamond Resort has managed to deal the timeshare industry in St. Maarten another blow with its belligerent attitude during summary proceedings that played out in court last Friday.

Its attorney maintained that the maintenance fee for the complaining owner at the Royal Palm club, Arthur Macdonald, should go up from $500 per month to $1,300 per week. He claimed that the resort has a $10 million deficit. He claimed that, if the resort is not allowed to impose the new maintenance fee, it will go bankrupt.

But these figures don’t add up. There are 23 so-called whole-owners at the royal Palm. These owners own 52 weeks and therefore they have, in fact, the sole ownership of their condo. If these 23 owners paid the higher annual maintenance fee of (roughly) $50,000, Diamond would collect $1,150,000. How is that going to save the resort from bankruptcy if there is now already a deficit of $10 million?

Berman, in spite of the fact that his client is American, claimed in court that “many Americans” come to St. Maarten to rob it empty, and that they buy their condos without paying taxes in St. Maarten or in the United States.

This rather crude attack on Americans who form the backbone of the timeshare industry and are therefore part of our economy’s lifeblood came straight out of left field and left many observers wondering what the purpose of this remark could be.

Arthur Macdonald, the plaintiff in yesterday’s court case remained unfazed. This newspaper quoted Macdonald on Friday as saying that the resort probably wants to get rid of him. Other owners who attended the court procedure, voiced similar sentiments and pointed to stories that are circulating about Diamond actions in other countries.

The essence of those actions is that Diamond forces owners out of their apartments by charging excessive maintenance fees. Then they obtain ownership at no cost at all.

The Royal Palm Beach Club consists of 140 apartments, of which 23 are in the hands of whole owners. The remaining 117 apartments are timeshares. Since there are 52 weeks in a year, Diamond is able to sell (52×117) 6,084 timeshare weeks.

With a weekly maintenance fee of $1,300 the resort would cash about $7.9 million in maintenance fees if all units were sold. If it manages to get the green light in court to charge the whole-owners $50,000 a year, it would add another $1.1 million to its revenue, bringing the total to around $9 million.

Against this background, Diamond’s claim that it has already run up a $10 million deficit this year, while it is only July, is therefore hardly credible.

Then why did Diamond’s attorney make that claim? The threat was very clear: we need these higher maintenance fees otherwise we’re going belly up. Not our problem, we could almost hear some people think, but ideas like this tend to send local politicians into panic mode.

A bankrupt Royal Palm is putting locals out of work, sends American timeshare owners probably elsewhere and causes, in short, a serious dent in St. Maarten’s economy and government revenue.

The case of the maintenance fees will drag through the courts for quite some time, because civil cases tend to move slowly. Macdonald’s attorney has already said that, as long as there is no court ruling, his client won’t pay a penny. Other owners at the Royal Palm, who will be in court this coming Tuesday, will probably take the same approach.

Then we will learn how serious Diamond resort is about pulling the plug on Royal Palm and about damaging the timeshare industry in St. Maarten to satisfy its own business needs.

ormal � e’����ttom:0in;margin-bottom:.0001pt;text-align: justify;line-height:normal’>Now, Wal-Mart won’t let me shop there anymore.

 

 

P.S. – I tell two kinds of stories. Those that are true and those that could be true.

We’re of two minds here. Knowing Mike we also know that at least two things are true: he really traveled to Ohio and he does have a Yorkie, but his name is not Bonheur. On the other hand, Mike doesn’t have 50 pounds to lose; if that happened, our good friend would vanish entirely as a result of his diet. But who knows? There are enough crazy diets out there, so maybe this one works for Animals R Friends supporters. We suggest that readers, who want to try this, inform the intensive care unit at the hospital before doing anything.

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