Ask RedWeek / September, 2015

Like the Manhattan Club - do timeshare owners unite on other resort issues?

We heard about the Manhattan Club owners joining forces, but we don't see stories like that very often. Are owners of other timeshares uniting with common concerns about their resorts?

Two recent cases — one in New York, the other in California — show what can happen when timeshare owners communicate and get organized to control their own destiny. While these cases are thousands of miles apart, they share two things in common — effective use of social media platforms, such as the forums on RedWeek.com and Facebook groups to spread their messages, and vocal leadership.

Manhattan Club Owners Rally in The Big Apple

We have been covering the legal situation at The Manhattan Club for over a year now. An independent information-and-organizational meeting was held on Aug. 2, to share owners' concerns about reservation issues, maintenance fees and, most importantly, the New York Attorney General's investigation of possible fraud at the Club. Last month's Ask RedWeek covered the discussions that transpired there. The owners met on their own --- with help and resources from RedWeek.com, TimeSharing Today and the National Timeshare Owners Association --- because they have been unable to get timely information from the Club and the AG's office. Their attendance was driven entirely by online posts and forums on RedWeek.com and e-mail blasts from the supporting companies. These online forums, in fact, are the only places where owners can communicate with each other and keep track of what's happening at the Club.

The communication blackout is deliberate: it enables both sides — the Attorney General and The Manhattan Club, to maintain some control of their legal options. But it's a disservice to owners, according to leaders in the timeshare industry.

"It was clear to us, from reading the RedWeek discussion forums, that many Manhattan Club owners were deeply upset with how they were treated, and didn't feel the resort was addressing their concerns," said Maurice Aubrey, President of RedWeek.com. "That's why RedWeek decided to collaborate with like-minded groups to help keep Manhattan Club owners updated. And - with the strength of our 2.1 million subscribers - to hopefully push for an amicable resolution to some of these issues."

The key to the August meeting's success was owner participation — driven, in large part, by a half-dozen owners who have zealously served as watchdogs for their fellow owners. These volunteer leaders — including Irene Smalls, Ed Schwartz, Chris Volpe, and Corinne Smith — have spent many hours reading legal briefs and providing commentary on online forums. They've also become a direct conduit to the New York-based news media that, occasionally, covers the Manhattan Club's timeshare issues. If the Manhattan Club case ever manages to spawn a movement in the timeshare world, the Aug. 2 meeting may be remembered as the day the movement started. And the leaders will come from the ranks of those who traveled many miles to attend.

RedWeek is actively maintaining an outreach page for Manhattan Club owners - building our own roster for communications. Owners can find all current information at the page, and sign up to stay informed.

In Lake Tahoe, Owners Unite to Thwart Takeover by Diamond Resorts

In California, a very different kind of communications battle is coming to a boil on the shores of South Lake Tahoe. At the Tahoe Beach and Ski Club (TBSC), a legacy resort with 140 units, longtime deeded-week owners are united in a movement to block Diamond Resorts from taking over the board and, they fear, the resort as well. They are using every means of social media — and owner e-mail lists, provided voluntarily by the HOA board — to generate support for their position.

During the past two years, Diamond has systematically bought TBSC intervals at foreclosures and tax sales, and now owns approximately 25% of the resort's estimated 8,000 intervals.

The resort's board is currently split 3-2 on whether Diamond's participation is beneficial or harmful. Diamond's purchases and maintenance fees (on previously delinquent intervals) provide a huge financial benefit to the resort. But beyond the money, Diamond's influence is feared by the board majority, who are now actively trying to block additional Diamond purchases.

The dispute is playing out in El Dorado (CA) Superior Court and on social media sites that the board has organized to inform owners about the issues — and trigger broad participation in an upcoming HOA election Sept. 26. President Alfred Fong and Treasurer Jake Bercu, staunch anti-Diamond owner advocates, are up for reelection. They are being opposed by a Diamond senior vice president, Frank T. Goeckel, and a former board president, Cathy Ryan, who wants to work with, rather than against, Diamond.

"It's all or nothing," Bercu said in a recent interview. "If we lose one seat on the board, the whole resort is gone."

Bercu is prone to making dramatic statements. But he's also the board member who has organized an online campaign — on Facebook, Yahoo and on the club's Web site — to broadcast all kinds of resort information to as many owners as possible. It's a stretch for a sleepy resort whose average owner bought timeshares before the dawn of the Internet era.

It's also an uphill campaign because Diamond has more than enough resources, including money, to support its position that Goeckel deserves a seat on the board. Goeckel has helped Diamond make block purchases at other resorts, including the Tahoe Seasons timeshare nearby, where he is also a board member.

"We're not going anywhere," Goeckel says matter-of-factly. "But I would rather work as a team" with the board.

So far, teamwork has been in short supply.

The current dispute dates back to last fall, when Diamond arranged to buy 241.5 Vacation Plans from the resort's then-management company, VRI. When the grant-deed was recorded in December, the TBSC board went ballistic. Fong, a retired postal worker who owns eight weeks at the club, repudiated the sale in a Jan. 9 letter to Diamond's attorneys. He said the board "did not and would not have authorized" the transaction. He also said that Diamond knew, prior to the sale, that the board was opposed to bulk transfers that could give corporate entities undue influence over board policies. Fong offered to submit the dispute to arbitration and refund Diamond's $228,200 purchase price, plus maintenance fees.

Instead of arbitration, Diamond filed suit Feb. 6 against Fong, Bercu, and the third anti-Diamond board member, Sedric Ketchum. It also sought an injunction demanding immediate recognition of its purchase and the right to make those units available to members of Diamond's timeshare travel club.

In early July, Superior Court Judge Steven C. Bailey denied the request for an injunction and, in his ruling, opined that Diamond would eventually lose the case at trial. "There is no evidence that, at the time of the sale, VRI had the authority to sell over 200 Vacation Plans to Diamond Resorts," the judge said. "Additionally, based upon the evidence before the court at this time, it does not appear likely that (Diamond) will prevail on the merits" of the lawsuit.

Diamond, undaunted, responded to the judge's ruling by filing new motions attacking the election process. The company claimed, in effect, that the anti-Diamond board would rig the vote-counting process to ensure Fong's and Bercu's reelection. Bailey denied those motions at a Sept. 4 hearing, and authorized the resort's new management company, Grand Pacific Resorts, to preside over the voting process.

So now, barring another legal appeal, it's all about the vote. Bercu and Fong figure they need 2,400 votes, each, to win reelection. They say Goeckel should be able to vote 1,800 or 1,900 votes for himself and Ryan. So the contest comes down to a handful of voters — 250 or so independent owners — people that Bercu and Fong are trying to reach through social media and weekly "owner update" meetings on the 420-foot slice of beach that the resorts owns on Lake Tahoe. So far, they've collected 500 owners on a Yahoo site, 250 on Facebook. They're also working on an e-mail campaign, using the owner roster, which is available to all owners, to get-out-the-vote on Sept. 26.

The real issue, Bercu says, is what Diamond intends to do with the resort if, at some point, Goeckel gains a seat on the board. Goeckel is extremely confident that, even if he loses this year, he'll win next year.

Bercu, the board's lightning rod, fears that Diamond would transform TBSC into a Diamond-like entity that turns original deeded owners into second-class citizens, raises maintenance fees and changes the reservation system. He points to other resorts where Diamond used bulk purchases to gain representation and board status.

Diamond owns the massive and recently refurbished Lake Tahoe Vacation Resort right next door to the Tahoe Beach and Ski Club. It also has reservation and usage options at four Tahoe resorts.

"I just want a fair election, but there's a lot of hostility here I don't understand," Goeckel said.

The outcome, both in court and on election day, will determine whether TBSC remains independent, or becomes another notch in Diamond's belt of recently acquired properties.

For more information about Tahoe Beach and Ski Club, visit the resort page or our discussion forums. Concerned owners can also join the closed Facebook group or active Yahoo group with 526 members.

Barriers to Owners Finding Each Other

Shep Altshuler, publisher of TimeSharing Today, is a longtime advocate of open communications among timeshare owners. He thinks boards should share ownership rosters with owners so they can communicate with each other. However, HOA boards have routinely refused to share rosters - often citing state privacy laws as the primary reason.

"When legitimate concerns arise, as in the Manhattan Club case, owners are routinely denied access to the list of owners to establish communications," said Altshuler. "This is an ongoing problem in the timeshare industry that has created tremendous angst and frustration among owners."

In at least one court case, owners have won the right to obtain e-mail lists so they can contact other owners about legitimate business issues at their resort. But there is no overall case law that guides the industry on this disclosure issue. It's handled state by state, resort by resort.

In this environment, Altshuler said, the Aug. 2 Manhattan Club meeting filled a much-needed information gap, providing owners with the "means to continue voicing their opinions and concerns through our publications, online forums and social media."

RedWeek is happy to help connect owners where we can. Our forums and outreach page for Manhattan Club are examples. If you own at a resort, you can now sign up to receive "Resort News & Updates" on any resort page (currently a bit hidden - you'll need to scroll to the bottom of the rental or resale postings at your resort and click "Sign up for alerts"). You may not receive anything from us for some time on most resort lists, but if a situation demands communicating with owners, RedWeek will certainly let you know.

About the author

This answer was provided by RedWeek's Chief Correspondent, Jeff Weir. Jeff is a California-based journalist who has covered California, Congress, and the White House. He also has roots in Silicon Valley, where he directed public relations and marketing programs for high-tech companies. He is also a timeshare owner and member of RedWeek.com.

Leave a comment