How can we ensure that resort fees have been properly handled in our potential hotel investment?

I’ve heard about the many issues coming out about resort fees and the importance of proper disclosure. We are seeking information about how we can independently verify that resort fees have been handled properly so we avoid a mess after the purchase.

  • Brooks Clark

    February 09, 2018

    Please make sure that any financial records you receive are audited and certified as true and correct in all material respects by an independent CPA of a good-sized accounting firm and the records should be preferably be prepared under GAAP. What fees must be paid are state and contract specific so without the benefit of knowing either I would confirm with local counsel where the property is located that all statutory and contact-based resort and/or timeshare fees are correctly accounting for in the financial records requested above. Also, I am only admitted in New York. So to the extent that this question concerns property outside of New York and/or information I have not been provided, no opinion regarding the same should be inferred therefrom.

  • Jeffrey Jahns

    Seyfarth Shaw LLP Real Estate Group
    February 09, 2018

    I am not sure what fees are being referred to, but assume that we are talking about incidental fees charged to occupants, like spa services, equipment rental, etc. Also, I am not sure whether we are talking about the ongoing management of such fees or the question of proration at the time of investment. At investment I would suggest that all such fees are deemed to belong to buyer/investor unless otherwise agreed or the timing and attribution is clearly determined to be otherwise. It also might depend on whether those fees are collected in the first instance by outside contractors or by management employees.

  • Donald Wen

    December 29, 2017

    The hotel’s current management company should be able to provide you with the answer.