In a classic David vs. Goliath battle, timeshare owners at a small resort in Lake Tahoe have fended off an attempt by Diamond Resorts to take control — at least for now. In an industry where the power balance seems to increasingly favor the big companies, it’s encouraging to see individual owners banding together and taking action.
Here’s what went down, and how the owners scored their victory…Beautiful Lake Tahoe
Diamond has plans for the resort
- Desirable lake front property. The Tahoe Beach and Ski Club has an enviable location right on the shores of Lake Tahoe. The property has a private beach just for the owners.
- Diamond is buying inventory. Diamond Resorts has been buying up inventory at this resort over the past couple of years, and now owns about 25% of all the timeshare units.
- Double edged sword. On the one hand, it’s beneficial for the resort financially to have Diamond buying delinquent units and making the maintenance fees. On the other hand, current owners don’t all trust their intentions, and are afraid of what a pro-Diamond board might mean.
Why do the owners care?
- Losing control of decisions. The board of directors makes decisions about the resort which can affect all of the owners. A central concern is that if Diamond Resorts controls the board, they might make decisions which benefit the corporation more than the existing owners.
- Could see increased fees. This is a scenario which has played out in other places. A company acquires a resort, and decides to upgrade the facilities. This involves substantial costs, and as a result, fees for existing owners can go way up. For many owners, a dramatic increase in their fees can be a big problem.
- Could lose private beach access. One concern specific to this property is that they might lose their private beach access, if Diamond opens up the beach to people staying at their other nearby resorts. The beach would be more crowded, therefore less attractive for current owners.
The battle for the board
- The existing board. The board of directors already had a 3-2 majority who were holding out against Diamond’s plans. Two of those 3 opposed were up for re-election, so if either of them lost, it could result in a pro-Diamond board.
- The candidates. The current president (Fong) and treasurer (Bercu) were running against two candidates from Diamond – a senior vice president (Goeckel) and co-challenger (Ryan).
- Diamond’s share of the vote. As a major property owner, Diamond has a large block of voting power – 1,604 votes they can allocate to their own candidates.
- The results. The incumbents were elected with 2217 and 2207 votes, while the challengers gained 1719 and 1624 votes. This doesn’t exactly seem like a landslide, until you consider that the Diamond candidate vote counts include 1,604 votes from the Diamond block.
If you look at just the votes by other owners (excluding the Diamond voting block), then the challengers received just 115 and 20 votes. Now that’s a landslide! The individual owners who cared enough to vote were overwhelmingly in favor of keeping their existing board, and denying Diamond Resorts the control they sought.
What happens next?
- Diamond’s not going anywhere. At an owner’s meeting, Goeckel said that Diamond is not going anywhere, and that even if he lost this year, he’ll get in next year.
- And the next election? It’s anybody’s guess, but if the owners want to maintain their independence, it seems they’ll have to keep up the fight…
What do you think? Which side would you be on? I’d love to hear your comments in the Reply section below. Thanks!