Shep Altshuler leads a discussion with Jeff Berger and Leigh Colyer about the impact of recent Hurricanes Harvey and Irma on popular timeshare resort destinations.
Contributed by ARDA-ROC/Resort Owners Coalition www.arda-roc.org
When natural disaster strikes, everyone stands defenseless in its path. Whether a tornado, hurricane, or fire, this X factor remains a constant threat to consider. In the face of these larger forces at work, there is no such thing as being too prepared-every industry, every business must have a risk mitigation plan. Hurricane Harvey in Houston: case in point.
Nowhere is this more important than the U.S. vacation ownership industry, as it serves 9.2 million owners and more than1500 resorts. Featuring a product that offers a lifetime of vacationing, the business is about being prepared from all sides and at all levels. Precautionary plans are built into the very structure of the product to protect all groups in the face of the unknown (legally and otherwise). Developers, management companies, and HOA boards come together to work in a safe way that ensures the most important timeshare agent is protected: the owner and his/her vacation and the safety and success of the overall resort.
The crisis plan has both short- and long-term implications as various phases are put into effect. At the most immediate level, exchange companies developers & management companies work as partners to deliver safety plans custom-made for every situation-ensuring a “people-first” focus on owner safety and accommodation. These teams implement crisis action plans, property evacuation, communication vehicles, reservation adjustments, special assessments/reserves, and renovation phases. Welk Resorts’ work with Sirena del Mar when Hurricane Odile hit Cabo San Lucas in 2014 is a great example of a solid transition plan that involved detailed care for staff and owners alike. The emerging changes to the resort resulted in an even more stunning property, as the repairs and upgrades were made.
There are many long-term effects of these types of catastrophes, whether the setbacks are financial or physical. But there is also another much larger story: how communities mobilize and come together as partners to rebuild and stabilize. And with the vested interest of timeshare owners and their resort caretakers, they are part of this fight to survive and contribute to the positive long-lasting economic comeback of a region that recovers. Let’s look the example of Hawaii, when Hurricane Iniki devastated Kauai in 1992. ARDA-Hawaii commissioned a post-disaster study for the four months trailing the event, to see the impact on timeshare in that region. Mitch Imanaka, managing principal of Imanaka Asato and former chair of ARDA-Hawaii, shares the compelling results of industry resilience.
“The study revealed that in all cases, across the islands, timeshare resort occupancy levels on average across the state did not drop off as severely as they did for more traditional hospitality products (10% versus 40%), such as hotels. In fact, year-over-year, Kauai actually had a 1% increase in occupancy over the prior year after the hurricane hit!”
Imanaka adds: “Of note is that during the post-hurricane period, timeshare resorts on Kauai were the first to re-build…testimony to the fact that timeshare owners really care about their resort.”
No hurricane touches down without leaving a trail of impact on businesses and regions and the people that will be part of the solution. But how well a resort is prepared for these scenarios can reclaim the end result of that event-as a powerful transformative testimony of success.
This is the strength of timeshare’s 50-year legacy, hope in the face of all odds.
By Scott McGinness, CIC, CRM, CSRM,Vice President, Property & Casualty, Gregory & Appel Insurance, www.gregoryappel.
Hurricane Harvey may be the costliest natural disaster in US history, with damage estimates over $190 billion. It will have an economic impact not only on Texas, but the entire US.
For the timeshare industry, we can expect to see an increase in Property insurance premiums. The insurance market has been very competitive for the last few years but this event will likely trigger a widespread rate increase. Even those insurers not directly impacted by Harvey will be forced to adjust rates based on the higher cost of reinsurance, which most carriers rely upon to share risk.
This event will also show the inadequacies of the National Flood Insurance Program (NFIP). One of those being the lack of Business Interruption coverage, which replaces lost revenue during a sustained interruption of operations. Many businesses, including timeshare resorts, are unable to recover without properly structured BI insurance.
The other major inadequacy of the NFIP is that it was $24 billion in debt prior to Harvey, and viewed by many to be unsustainable. Harvey may put it over the edge. Not only will the future availability of the NFIP be in doubt, but their ability to respond adequately to Harvey is questionable.
Because of the existence of the NFIP, traditional insurance carriers have played a secondary role in providing Flood insurance. Those carriers willing to offer coverage do so with high deductibles, or in excess of NFIP limits. With the future of the NFIP in doubt, they’ll need to step in to satisfy the need for Flood insurance. That will come with increased premiums, however, since the private insurance market won’t subsidize premiums as the federal government has been doing with the NFIP.
Timeshare resorts, and businesses in general, should prepare for increased Property premiums, and perhaps diminished availability of coverage in 2018. This is true particularly for resorts located in coastal areas. For this reason, it would be advisable to get an early start on the insurance renewal, perhaps 120 days in advance of the expiration date. This gives your agent time to explore all available options in containing premiums and providing adequate coverage.
By Chad Dorsey, Vice President, CIC, CRIS, Brown & Brown of Florida, Inc. Vacation Resort Specialty Division, http://bb-wpb.com/
On Friday, August 25th Hurricane Harvey made landfall northeast of Corpus Christi, Texas as a category 4 storm with sustained winds of 130 mph proving to be one of the fiercest storm’s to hit the U.S. in over a decade. Once Harvey made landfall it was quickly downgraded to a category 1 hurricane and bringing with it over 50 inches of rain in certain areas of Houston, our nation’s 4th largest city.
Though some property damage will be attributed to wind, there is no question the majority of devastation caused by Harvey is a result of flooding, a peril primarily insured by the federally funded National Flood Insurance Program (NFIP). The NFIP, prior to Harvey’s arrival, owed the U.S. treasury over $24B in part due to previously paid claims from hurricanes Katrina (2005), Sandy (2012) & Matthew (2016). It is still too early to tally the full damages of this most recent weather event but it is sure to place additional financial strain on the NFIP as initial estimates of Harvey’s damage are expected to exceed tens of billions of dollars.
Due to the current financial crisis the NFIP finds itself in, flood premiums in many parts of the country have increased 25% already this year as a result of rate increases. In addition, the NFIP has a renewed nationwide emphasis on reviewing the accuracy of flood zone maps causing certain resorts to be reclassified from low risk to severe zones which is only further increasing premiums and reaping unanticipated havoc on resort budgets. Congress has until Sept. 30 to reauthorize the NFIP and in the wake of Harvey an extension is likely as is the continued debate surrounding the best way to establish a flood program that is financially capable of meeting it’s claims obligations on premium dollars alone and not an IOU from the national treasury.
The NFIP provides the most cost effective insurance policy for timeshare resorts to insure against flood however timeshare boards must recognize the programs various coverage constraints. For example, in many cases the true replacement cost of a resort exceeds the maximum coverage limits available through the NFIP. It is also important to note that nonresidential buildings (i.e. clubhouses) insured for flood through the NFIP are insured on an actual cash value basis (depreciation taken) and not replacement cost. In addition, the NFIP does not insure the business income loss and extra expenses a resort incurs following a covered flood event.
Resorts purchasing coverage through the NFIP, especially properties in moderate to severe flood zones, should budget conservatively for a possible 25% premium increase effective next renewal. The pattern of seeing higher flood premiums is almost certain to continue for many years until the NFIP can repay the federal treasury or the private insurance market sees a way to competitively underwrite our nations flood risk while still making a profit.
Lastly, it is important to remember that floods can happen anywhere and affect any resort. The Federal Emergency Management Agency or FEMA reports that more than 20% of flood claims come from properties outside of a high risk zone. Don’t allow your resort to take a chance like many Houstonians did – buy flood insurance to protect your resort from a flood disaster.
The strength of hurricanes is rated using the Saffir/Simpson scale in the United States. This scale assigns a storm to one of five categories based on its wind speed. Category one is a minimal hurricane and category five is the strongest. Using this scale helps estimate the potential property damage and expected coastal flooding from a hurricane.
Categories are determined by Maximum Sustained Winds as follows:
- Category 1. 74-95 mph
- Category 2. 96-110 mph
- Category 3. 111-130 mph
- Category 4. 131-155 mph
- Category 5. 156+ mph
What is a tropical disturbance?
A tropical disturbance is an organized system of clouds and thunderstorms without a defined circulation.
What is a tropical depression?
A tropical depression is an organized system of clouds and thunderstorms with a circular wind circulation and maximum sustained winds less than 39 mph.
What is a tropical storm?
A tropical storm is an organized system of strong thunderstorms with defined circulation and maximum sustained winds of 39 to 73 mph.
What regions around the globe have hurricanes?
Hurricanes develop over tropical or subtropical waters around the world. There are seven tropical cyclone areas (basins) where storms occur:
- Atlantic basin (North Atlantic Ocean, Gulf of Mexico and Caribbean Sea)
- Northeast Pacific basin (from Mexico to the dateline)
- Northwest Pacific basin (from the dateline to Asia)
- North Indian basin (including the Bay of Bengal and Arabian Sea)
- Southwest India basin (Africa)
- Southeast Indian/Australian basin
- Australian/Southwest Pacific basin
What is the “eye” of the storm? What are rain bands?
The hurricane’s core is called the “eye.” The winds closest to the eye, typically averaging about 60 miles from the center of the storm, are the strongest and bring the most potential for damage. Rain bands, or outer spiral bands, are the bands of clouds and thunderstorms that trail away from the eye wall in a spiral fashion and are capable of producing heavy bursts of rain and wind. The spiral bands also make hurricanes appear to cover a much larger area with damaging winds than they really do. This is the reason why damage during strong storms does not cover the entire area the storm passes over.
Why are hurricanes named? Who names them?
The National Hurricane Center is responsible for naming tropical cyclones in the Atlantic basin. Hurricanes are named to provide ease of communication and reduce confusion between forecasters and the general public regarding forecasts, watches and warnings.
By Shep Altshuler, publisher TimeSharing Today
By now, every American has been touched, in some way, by the effects of hurricanes. They imperil lives, property, and businesses. Death and destruction threaten as we watch the most severe storms form, grow, and roll across the national landscape. We also know the international devastation caused in parts of the world that are less capable of responding as we do here in the U.S.
We know them by name — but these monster storms are not our family members or friends. They enter our lives as unwanted invaders, foes wreaking havoc and terror on a scale beyond most terror attacks.
Unlike terror attacks, hurricanes are predictable. We can see them coming from hundreds of miles away. They’re reported and tracked on the news and by multiple weather-reporting services. As the winds blow, and the waters rise, we see the toll of injuries and deaths rise in the aftermath.
In the world of vacation ownership, TimeSharing Today, its readers, and industry providers are among those who are impacted. We may live far away from the eye of the storm, but our resort could be dead center when the hurricane hits.
Our thoughts and prayers go out to all victims of extreme natural disasters.
By Kristina Payne
Maui County has been ordered to return $10.7 million to Ocean Resort Villas and Ocean Resort Villas North.
Maui Now and The Maui News reported that the litigation began after the county assessed additional taxes for the timeshare properties, claiming that they owed a total of $10 million in property taxes for 2006, 2007, and 2008.
The timeshare associations claimed that this additional tax was imposed in response to another lawsuit that started in 2013 and is still pending.
Judge Peter Cahill sided with the timeshare associations because of the way the county reassessed the property tax. This sets a precedent in favor of timeshare buyers. The judge was worried that future buyers would not fulfill their tax obligations if the tax can change at any time.
The county is appealing the decision.
What does this case mean for the timeshare industry? Tell us what you think on our Facebook or Twitter page.
By Kristina Payne
In this new age of fast-paced technology, keeping track of the best ways to protect your information from thieves and criminals is becoming increasingly difficult.
A lot of online articles will give you quick tips on how to protect your identity while you’re on vacation, but protecting your information isn’t that simple any more.
Most websites, online retailers, and even walk-in stores keep your credit-card information on their corporate servers. Web browsers such as Internet Explorer and Google Chrome have options to save your credit-card information for easier checkout. This seems pretty convenient, until you think about recent news of hacking and website outages all over the internet.
This is scary and seems to be out of hand, with corporations collecting personal information without regulation. Although major hackings are hard to control and predict, you can take three main steps to help protect some of your information.
- Never input or post your Social Security number anywhere on the internet. No website should ever ask for that information, and no bank will ever ask for that information over the phone or in an email. If someone asks you for that information, hang up the phone or delete the email right away. If a website asks you that information when you’re checking out after some online shopping, do not make a purchase and leave the website. Your SSN is just as unique as you are. It’s the number-one way a thief can steal your identity.
- Use gift cards and cash while on vacation. Going to a nice resort for your vacation can be a great time, but do you know how safe that resort is keeping your information? A risk is associated with using your credit card when purchasing and planning that vacation online. Many companies, including like Visa and MasterCard, have gift cards that look and act just like a debit account, to which you can add money as you go. Using one of those while on vacation can help you protect your information as well as stick to a budget. In a foreign country, using cash is always better than anything else.
- Keep a close eye on your bank account. Sometimes you need to input your credit-card information on a website, or maybe a store that you’ve recently visited reported the theft of some credit-card information. To help protect yourself in such situations, check the amount of money in your bank account daily, and keep a close eye on your credit score. Most banks will deactivate a debit or credit card when you alert them to suspicious activity on your account. Fixing issues with your credit score can be more complicated, but the sooner you find a problem, the sooner you can work toward a solution
To prevent massive damage to your identity and credit, keep track of when and where you use your credit-card accounts and provide personal information. With proper planning and simple precautions, you can enjoy a worry-free vacation.
Kristina Payne is the social-media coordinator for TimeSharing Today.
Robert Bone, an owner at Olympic Village Inn, Olympic Valley, CA, discusses why he became proactive, his motivation to run for election to the Board of Directors and the obstacles he has encountered from the current Board President.
By Kristina Payne
On August 21, 2017, everyone in the continental United States will be able to see the first solar eclipse since 1979. The next one that will encompass the entire U.S. won’t be until 2024.
A solar eclipse occurs when the moon passes between the earth and the sun, blocking the sun’s light and casting a shadow over the earth. It will not be as dark as nighttime because the eclipse emits light just as the sun does.
Looking directly at the eclipse isn’t safe. To view it safely, either buy special solar-viewing glasses, or create a projector for it. To create a projector, poke a small hole in a piece of white cardboard, and hold it over a piece of white paper so it creates a shadow. The hole will mimic the sun and show you the progress of the eclipse.
The total eclipse will be visible in 14 states. Moving from west to east, it will cross Oregon, Idaho, Wyoming, Montana, Nebraska, Iowa, Kansas, Missouri, Illinois, Kentucky, Tennessee, Georgia, North Carolina, and South Carolina. The rest of the U.S. will be able to see the moon cover most of the sun.
More information on the eclipse is on NASA’s website: https://eclipse2017.nasa.gov/eclipse-who-what-where-when-and-how. Mark your calendar with the time the eclipse will occur in your location.
Kristina Payne is the social-media coordinator for TimeSharing Today.