Laurelwood Board Meeting Destination Hotels & Resorts 22 - - PDF document

Laurelwood Board Meeting

Destination Hotels & Resorts

22 September 2008

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Destination Resorts Snowmass Cost Structure for Laurelwood

Laurelwood & Destination Resorts Snowmass (DRS) Contract and Cost Sharing Arrangements: I.LAURELWOOD

• A. Currently LW pays DRS a Management Fee in the amount of $1,232/month, or

$14,784 annually.

• B. LW pays DRS an Incentive Fee of 8% of Revenues over $683,000. The last

payment received was in May, 2008, for the year ended Dec 31, 2007, in the amount of $40,900.22.

• C. Contribution to DRS Marketing Budget, $5,000/yr.
• D. Contribution to Revenue Manager Salary (11%), $5,390 plus P/R taxes.

II.Destination Resorts Snowmass (DRS)

• A. Interlude Check-in Fee ($450 x 11 units) at $4,950/yr.
• B. Contribution to Reservations Mgr (20% of salary) at $9,200/yr.
• C. DRS pays 100% of Gus (Peter Oliver).

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Services & Costs

I. Human Resources & Payroll

A. Actual payroll generation. B. Government reporting. C. Deposit of Withholding amounts. D. Group Health Plan premiums and administration. E. Flex Plan administration. F. 401K premiums and administration. G. COBRA administration H. Aid staff with medical claims. I. Employment Practices Training. J. Assistance with associate grievances. K. Harassment claims. L. Screening and enrolling new staff. M. Foreign worker recruitment—H2B visa workers. N. Provided new time clocks and upgraded payroll software.

DRS provides these services to LW at no cost. To contract ADP to do it would run somewhere between $22,000‐‐$28,000 for the full gamut of products, and as little as $12,000 for basic payroll only.

Value to LW: $12,000 or more

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Services & Costs

II Accounting Support

– At present, Mary Roberts on the DRS accounting staff spends 12 to 16 hours per month doing accounting work for the LW. The amount of work varies month to month, but includes the following: Bank Reconciliations for the Advance Deposit Account, two checking accounts, and two money market accounts. – Accounting also runs advance deposit reports and reservation statistic reports for month end. – Accounting conducts the linen inventories twice a year. – Accounting provides FRS accounting support when asked. – Monthly billings between LW and DRS are largely generated by DRS staff. The most critical billing is for Payroll and associated costs, which DRS pays out of its accounts and then bills back to LW.

DRS provides these services to LW at no cost. The value at $55/hr for accounting services for 12 to 16 hours runs between $8,000 and $10,560 per month.

• Value to LW: $9,500

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Services & Costs

• III. Reservations Training and Support

A. Professional training by Aspire in conjunction with the other DHR mountain properties twice a year. B. Call monitoring with test calls twice per month. DRS pays $100 bonus to LW reservations staff for each score of 100 or better. (James has collected several times.) C. Support for FRS Reservations System from Melanie (Stb) and Marie (TOV) for training and issues with the FRS reservations system used by LW. (As you recall, DRS has offered to install an upgraded SMS reservations system to LW at no cost, and to train staff on it.)

DRS provides these benefits at no cost to LW. To establish the value would take some research but could be done. The training sessions alone are worth over $2,500. Value to LW: $2,500

• IV. IT Support

A. Support for the computer systems at LW comes from two

• sources. Sam Ferguson, DRS Controller, will examine the

problems and fix them if he can. B. If he is unable to do so, Forward Computer is called in at a cost that is generally over $100/hr.

DRS provides this benefit at no cost to LW. To establish the value would take some research but could be done. Probable at least $2,000 is saved from not having to call Forward Computer during a year’s time.

Value to LW: $2,000

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Services & Costs

• V. Destination Privileges™

Exclusive Program for Homeowners on Rental Program

• A. Discounts of up to 50% at all DH&R

Hotels & Resorts

• B. Discounts for Friends and Family at

DH&R Hotels & Resorts

• C. Partner Programs for Rental Cars and

more

• D. Private Secured Web site for posting

rental statements and information about your unit

Cost to LW: 0 Value to LW: Priceless

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Services & Costs

VI Maintenance Backup

A. There are many instances of where DRS and LW staff work together to the benefit of both sides, but a particularly good example is Peter Oliver (Gus). He is the resident manager/maintenance supervisor for the Interlude, and is 100% funded by DRS. Gus does work for the Interlude rental program and for the Interlude Association. While Gus covers the LW for Tony on his days off and vice versa, and assists Tony with any “two man jobs”, the benefit to the LW goes a little deeper in that Gus is the more experienced and capable of the two. He is there at no cost to the LW, to assist in maintenance issues as was evidenced during the LW boiler failure earlier this summer.

Cost to LW: 0 Value to LW: Considerable but not quantified VII Insurance Policy

– The Laurelwood Condominium Association is insured under a DHR Master Policy for General Liability and Property Insurance. By combining with over $200 million in other DHR properties, the LW, which is calculated to cost $13 million to rebuilt in the event of a total loss, enjoys coverage up to $200 million! In the same manner, it has liability coverage up to $150 million. This tremendous coverage is provided at a savings of 30% to 35% under what LW would be charged for a free standing policy through an insurance agency. (The basis of this estimate is that TOV obtained a competitive bid from the Neil‐Garing Agency two years ago.) Directors & Officers Insurance is also placed by DHR’s Risk Management Office but is a separate policy. Based on the 2007 premiums of $23,400 and a 30% savings, the LW enjoyed a savings of $10,025.

Cost to LW: 0 Value to LW: $10,025

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Services & Costs

VIII . Revenue Manager

A. The Revenue Manager trains on‐site reservations staff on how to input the number of rooms available and rates for the different Internet electronic booking sites. This includes the LW owned site, Expedia, Travelocity, Orbitz, and SynXsis, which is a central site that provides access to other Internet booking engines such as Condosavers.com and TravelWeb which do business with the LW. B. General account setup/configuration/administration/maintenance for SynXis and all 3rd party extranet partners (Expedia, SAS, etc.) C. LW operates under a DHR Contract with all the major booking engines, and the RevMgr is responsible for all property content/room description/photographs, policy descriptions, etc. D. Weekly communication with each of the market managers and account managers for the internet partners with the goal to improve placement and maximize exposure. E. Load and modify rate configuration for all rate plans (BAR, promotional, package, online wholesaler). F. Create package deals on the Laurelwood site to allow booking on‐line. G. Weekly reports and strategy boards analyzing booking pace, backlogs, compression, and the need to adjust rates, patterns and policies going

• forward. Strategy Boards now include the rest of summer, 2008, and all
• f winter 2008/2009.

H. Meet weekly with LW staff to review needs and actions to be taken to maximize revenues. One meeting at LW and one meeting at Stonebridge with the other GM’s and Res Mgrs. I. Commission Savings on all online Wholesale Commissions

It is tempting to minimize the value of the Revenue Manager to LW, since he has taught LW staff to load their own inventory and rate changes so that they can now do it

• themselves. However, as detailed above, this is only the tip of the iceberg with regard to

all that is involved in electronic booking management. The entire compensation package

• f the Revenue Manager exceeds $60,000, and LW contributes only $5,390 plus Payroll
• Taxes. To hire a consultant to do it, as the Timberline has done in the past, or to find 3 or

4 other properties to go in with, would probably cost LW $20,000/year or more. Even if such a service was found, it would be difficult to imagine that LW would get the daily attention that it gets from the DRS Revenue Manager.

Cost to LW: $5,390 + Taxes Value to LW: $20,000 or more. Commission Savings in 2007 over $9,000.00

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Laurelwood Property Comparison Report MTRiP™

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Laurelwood RevPar vs. Comp set as prepared by MTRiP™

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Laurelwood vs. Stonebridge Occupancy

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Services & Costs

IX Marketing & Sales

A. DRS has a $639,984 Marketing and Sales budget, of which a total of $326,000 is related to staffing. The staff members promote the LW equally with the other DRS properties, to the extent they have been allowed to do so, whenever they are on the road, doing site visits, doing proposals, attending trade shows, or calling on travel producers. The

• ther $313, 495 is spent on a host of sales and marketing activities

ranging from collateral production and advertising to electronic distribution fees and mailings. Laurelwood is included in all of these efforts and programs. We would be happy to give a presentation of the Marketing & Sales plan at your convenience. B. LW, despite its lack of meeting space, has long benefited from sharing groups with TOV (Sarasota Ski Club for example) and Stonebridge (APS for example). DRS is restructuring its sales team deployment, and we envision much more sales potential going forward. With the continued existence of the Snowmass Conference Center in doubt, LW will be needing expanded group sales support. C. Web Site as an element of the budget DRS partners with E‐site marketing to maximize unique visits and revenue through search engine

• ptimization (SEO) and pay per click ( SEA) campaigns we feel there is

great potential for Laurelwood leverage this partnership further Although DRS treats LW as an equal partner in the Marketing & Sales budget, by contract the LW pays only $5,000 against the $639,984 budget. Per our method

• f allocation based on LW being 11% of the total DRS room revenues, a more fair

cost would be $70,400 of the total budget, or $34,484 of the non‐payroll related budget.

Cost to LW: $5,000* not including web site Value to LW: $34,000 or more

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Snowmass Village Reservations Outlook

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2008 Unique Visitors per Website

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YTD Unique Visitors by Web Site

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YTD 2008* Room Nights by Web Site

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Proprietary Web site Average Daily Rate by Site

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YTD 2008* Room Revenue By Web Site

* August 2008

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Percentage of Revenue by website representing Laurelwood Condominiums

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Web Site Influenced Room Revenue

* According http://www.bazaarblog.com/2008/02/27/for‐every‐1‐spent‐online‐the‐internet‐influences‐345‐offline/

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Top 5 Laurelwood Online Travel Partners

2008 YTD (09/18/07) 2007 YTD (09/18/07) 2007 YTD (Actual)

PARTN ER

Nights Revenue ADR Nights Revenue ADR Nights Revenue ADR

Expedia

714 $118,110 $165 499 $71,033 $142 638 $93,090 $146 Travelocity 173 $26,095 $151 188 $28,033 $149 271 $39,680 $146

Orbitz

157 $20,261 $129 198 $25,538 $129 249 $30,681 $123

Hotwire

40 $5,411 $135 133 $15,058 $113 152 $17,008 $112

Priceline

82 $10,172 $124 46 $7,474 $162 64 $9,156 $143

TOTAL

1166 $180,049 $154 1064 $147,1 36 $138 1374 $189,6 15 $138

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Online Travel Partnership Savings

2007 2008 YTD (09/18/07)

Partner

NET DH&R NET Non DH&R Revenue Saved NET DH&R NET Non DH&R Revenue Saved

Expedia

$ 74,472 $69,818 $4,655 $94,488 $88,583 $5,906

Travelocity

$ 31,744 $29,760 $1,984 $20,876 $19,571 $1,305

Orbitz

$ 24,545 $23,011 $1,534 $16,209 $15,196 $1,013

Hotwire

$ 13,606 $12,756 $850 $4,329 $4,058 $271

Priceline

$ 7,325 $6,867 $458 $8,138 $7,629 $509 $ 151,692 $142,211 $9,481 $144,039 $135,037 $9,002

Savings

7% 6%

Revenue Per Owner – Based

• ff of DH&R

Relationship

$197

Total Revenue Saved by utilizing DH&R Partnerships

$9,481

$187.55

Estimated Total Revenue Saved for 2008 – Based

• n current Pacing

$11,602

$241.70

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