GOVERNANCE

How do Monarch Reserves address keeping villa furniture, carpet, appliances, etc. up to date?

Monarch Reserves plan funding to refresh villa interiors about every six years including "soft" goods (window treatments, carpet, upholstery, paint, etc. Every second refresh is planned to include "hard" goods (furniture, fixtures, hardware, etc.) The useful lives of various components do not always fall conveniently into this cycle, and sometimes it is possible to extend certain replacements while it may be necessary to accelerate others. So, each refurbishment project develops a detailed scope of work, guided by life expectancy estimates, engineering and housekeeping recommendations, and owner/guest feedback, as well as budget. Monarch underwent a major refurbishment in 2018 and 2019.

When are maintenance projects typically scheduled?

Monarch's operating schedule reserves two weeks per year for maintenance to allow Engineering and Housekeeping Departments full access to units to carry out projects that take more than the normal 6-hour window between owner reservations. The maintenance weeks are scheduled near the end of the year when occupancy is lowest.

How are Monarch maintenance fees developed and what are the main reasons for changes?

The Owners’ Association is responsible for all costs at Monarch. The Association hires Marriott to manage the resort but the Association pays all costs. Marriott and the Association Board of Directors Finance Committee work together closely to develop an annual operating budget to provide for operating expenses and a reserve budget to replace assets when needed. The annual amount for both budgets is allocated equally to each two-bedroom unit week (although three-bedroom units pay twice the two-bedroom rate). The Association Board reviews Marriott’s proposed Operating and Reserve Budgets before approval.

Both budgets typically increase due to inflation. In addition, costs on Hilton Head are influenced by our island location. Wages often increase more than the national rate to reflect the time to travel to work from affordable housing, which may not be available on the island. The cost to bring materials to the island can be impacted, as well. The cost of contract services like housekeeping, landscaping, pool cleaning, and pest control, are bid, but all resort costs are subject to the cost of delivering the service on the island.

In recent years, the cost of insurance and deductibles have increased substantially to reflect the impact of multiple hurricanes that have reached the island and generally have impacted beach resorts in the southeast U.S.

The Association also has made targeted investments to improve services and facilities to keep our resort on pace with offerings at first class resorts both on Hilton Head and that our owners find at other resorts they visit.

As well, the annual maintenance fee includes a reserve fee, to fund the cost to replace assets when needed. The Reserve budget funds replacement of all resort assets over time according to their expected useful lives. As mentioned above, the schedule typically replaces soft goods every six years and both soft and hard goods every twelve years. The Reserve budget also funds improvements like wi-fi and television upgrades to keep technology up-to-date and to meet owner and guest expectations. And as time passes, longer lived and higher cost assets come due for replacement. In addition, salt in the air from the ocean causes exterior assets to age more quickly. Monarch was first opened in 1982, so major projects like roof, air conditioning units and even the building exterior have been addressed in recent years.