Maintenance Fee Musts: Ten Rules for Prompt Payment

When talking about and with resorts, there’s one topic that’s not as fun but still vital to a resort’s success: maintenance fee collections. When some owners don’t pay in a timely way, that can mean that other owners have to pay more or that the resort can’t provide services at the expected level. When taken to an extreme, serious, widespread delinquency in maintenance fee collections can threaten a resort’s very existence.

But there are ways for resort management to foster an environment where delinquencies are very low. Here are some tips from experts at Vacatia, a leading provider of innovative, customer-centric solutions for timeshare resorts, and Meridian Financial Services, a company that has provided third-party collections services to the timeshare industry since 1989.

1. Put hospitality first.

Owners purchased because they want a place where they can create memories with their families and friends,” says Greg Eure, head of growth at Vacatia. “Having a dedicated team that goes above and beyond to elevate the guest experience every single day means they can do just that.” At Vacatia, the management company takes on the administrative chores, which frees up on-site staff to remain guest-focused at all times, and for the jobs that must be done on-site, better technology can make those easier. “Being available to engage with guests is vital to the long-term financial health of the association because their experience on-site is often the No. 1 determinant of whether they are going to keep paying their maintenance fees.”

2. Offer Usage Options.

Rentals, internal exchange (within the resort or resort family), exchange through RCI or Interval International, are all avenues for owners to access the value of their ownership. “At Vacatia, we provide tools that make it much easier for owners to manage their vacation ownership products, whether they go to their home resort, another Vacatia-managed property through our internal exchange OwnerPLUS, other properties in our rental program or choose to exchange,” Eure says. “Our goal is to take some of that complexity away.”

Related: Managing Maintenance Fees – Resort Management Gets Creative

3. Reinforce the Value.

“It’s critical to engage existing owners and new owners in a communication stream that includes information about what is going on at their resort and all the benefits they receive as owners,” Eure says. “Stories about owners reinforce the cultural community that’s created around this product, and they’re what makes their ownership experience different than a transactional stay at a hotel or rental.” Although many Vacatia owners have strong emotional connections with their home resorts, highlighting other options can eliminate the “been there, done that” mindset. “Sometimes, people are just ready for new experiences, and we can provide them,” Eure adds.

4. Listen to your owners.

“If owners are not paying on time, find out why if at all possible,” Eure advises. At one Vacatia resort, an owner who was experiencing financial difficulties was able to rent his high-season summer week to cover the maintenance fee and still enjoy a great vacation in the off season.” If owners are confused about how to use the product, Vacatia staff will guide them through their options step-by-step, helping them make the most of their ownership.

5. Keep Up-to-Date.

Use owner touchpoints as an opportunity to verify that the information you have in owner records. “Reservations phone calls, check-ins, courtesy calls are all great times to ask owners to update their contact information,” Eure advises. “Our owner portal does this automatically, so owners using it are up-to-date.” In the event an owner must be referred to collections, this information is crucial. “When resorts have the capacity to furnish more precise data, including multiple phone numbers, social security numbers, dates of birth, that definitely enhances our ability to establish contact with consumers,” says Greg Sheperd, president of Meridian Financial Services. “This aspect is paramount in facilitating the collection process.”

Related: Ten Tips for a Successful Maintenance Fee Collection Cycle

6. Have standards.

“Putting rules in place and following them is what’s fair to the owners who do pay their bills,” Eure says. He advises starting with courtesy calls 30 days after bills are sent. If fees are not paid on time, then owners may be locked out of their intervals until they are back on track. Owners are also notified that the non-payment may be referred to a collections agency. “I advise establishing a collection policy and adhering to it consistently, even painstakingly,” Sheperd says. “It’s beneficial that this includes sending invoices and late notices and placing accounts with a third-party agency in a timely fashion.”

7. Call in the Collections Pros Sooner Rather Than Later.

“You don’t want to be too heavy-handed right out of the gate, but after a period of time, those accounts have to go to collections,” Eure says. Meridian’s Sheperd agrees, saying, “We advise the placement of most third-party accounts to happen around 90 days of delinquency. While Meridian does accommodate accounts at different stages of delinquency, it’s crucial to recognize that the longer an account stays delinquent, the less likely it is for our collections efforts to succeed.”

8. Get Serious.

What can a collections agency do that a resort can’t. “There are several things, and they range from practical, technical, and even a psychological perspective,” Sheperd says. “Upon receiving the account, our agency conducts a thorough skip trace and data scrub to ensure accurate contact with the relevant parties. Upon placement, we have the capability to report delinquent accounts to consumer reporting agencies, which has a much greater impact to a consumer’s credit score than if the reporting came from the actual creditor, so this increases the urgency for resolution of outstanding balances. Once we engage with the consumer, we manage payment arrangements, negotiate settlements, and present options in a timely manner. These are things that the resort often doesn’t have time or the resources to effectively manage. Over time, agents employ time-tested, customized strategies and leverage sophisticated telephony technology to boost call volume, effectively addressing any objections raised by consumers. Finally, simply receiving a notice or a call from a third-party collection agency creates substantially more urgency for the consumer than a call directly from the creditor.”

9. Follow the Law.

Debt collection is highly regulated by both state and federal agencies that have stringent requirements. “Ensuring compliance is integral to our role as a collections agency,” Sheperd explains. “This safeguards the interests of both our company and our clients. Once the collections process commences, direct all communications with the owner back to the agency until the debt is resolved.” When resorts handle their own collections, they need to consult with attorneys who are experts in collections law to ensure their communications don’t omit any necessary information or include language that violates state or federal law.

10. Accept When An Ownership Must End.

When an account is hopelessly delinquent or it is clear that an owner will simply disappear rather than continue, provide a way out. “In these cases, deed in lieu is usually thousands of dollars less expensive for the HOA versus a foreclosure,” Sheperd says. “Often, our agency is successful in getting the consumer to pay the resort enough in dues so that the resort has time to sell the interval and bring in a new dues-paying member. Those guidelines are put in place by the client.” Eure agrees, saying, “This is why you need an active resales strategy and a plan to monetize association-owned inventory. Eventually, everything comes to an end, but Vacatia can create new beginnings.”

Judy Kenninger heads Kenninger Communications and has been writing for the vacation real estate industry for two decades.

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