The Lochanhully Woodland Club (Kenny Griffith a very Balanced Man and Good Committe Man to have)

THE LOCHANHULLY WOODLAND CLUB

  29^th July 2014

Dear Fellow Owners

As promised in my letter to you last month, I am now writing specifically with regard to The Way Forward with specific reference to the confirmation by Macdonald Resorts Ltd (MRL) about their proposal which, for those Lochanhully Owners with the financial means to pay the relevant fee, will afford a guaranteed exit opportunity. This proposal would require a special amendment of the constitution as further outlined below.

1.     OUTLINE OF NEW MRL PROPOSAL

The new MRL proposal is complex and far reaching and has required careful consideration as it fundamentally changes the legal constitution and operation of Lochanhully and the rights of Owners. We have again engaged Brodies to provide independent legal advice to ensure that all aspects of this proposal are legally valid under the existing Owner contracts and Lochanhully constitution and that they provide a fair and equitable solution for all, including (i) those that want to leave, (ii) those that want to stay, and (iii) MRL.

The proposal is to convert the Club from its present “fixed apartment/fixed week” basis to a “points” club. Each Owner at the Club will cease to own his/her fixed week in a specified apartment and instead will become the Owner of a specified number of points, which they would be able to exchange for a week’s holiday at Lochanhully or one of the other MRL Resorts.  All Owners at Lochanhully will have an opportunity to leave the Club provided that they are not in arrears with management charges and they pay to MRL a termination payment in respect of each Holiday Certificate held which is expected to be four times the current yearly management charge.

Owners who meet the conditions are guaranteed an exit within a few months of the constitution being put in place.  They will also receive a holiday voucher for each week given up, entitling them to one week’s accommodation at Lochanhully, subject to availability in each of the subsequent two calendar years. Thereafter, Owners will have an opportunity to request an exit every two years on the anniversary of the exit date agreed in 2014. The same conditions are intended to apply, but not all Owners who wish to exit are guaranteed to be able to do so. This is because points will only be cancelled in “blocks” which are equivalent in number to the overall points value of an apartment at the Club.

Please see Appendix I for further details of the MRL points proposal.

PROS AND CONS OF NEW MRL PROPOSAL

There are a number of pros and cons to the new MRL proposal.  Clearly, the exit involves payment of an exit fee which enables Owners to exit and be released from the existing ongoing contract whilst transferring the entire legal and economic interests in lodges to  MRL. As owners exit MRL will be able to take ownership of lodges, provided there are enough lodges and weeks to satisfy all the existing points. In theory, all of this is expected to reduce the costs of maintenance for those who chose not to exit the current fixed apartment/fixed week arrangement (but which MRL intend to become a points based system).

The Owner representatives on the Committee have spent considerable time to understand the permutations and implications of the proposal to all stakeholders.  The Committee is very aware and fully takes into account the clear indication that the vast majority of Owners object to the current contract in perpetuity and would like to exit the Club in the short term.  However, in acting responsibly, it is incumbent upon the Committee to try to ensure a fair and balanced outcome for all.

The Owner Representatives on the Committee have challenged the following:

• the legality of the MRL points proposal;
• the appropriateness of the points valuation and other relevant pricing (e.g. the exit fee);
• guarantees that maintenance and other charges will not be ratcheted up for those who either do not have the means to pay the exit fee and also for those who simply do not wish to exit;
• the mechanisms in place to ensure that existing members are not further unfairly prejudiced by absorbing unreasonable costs relating to bad debtors;
• removal of the recently added change to the constitution allowing the hand back on death of the last signatory of the holiday certificate; and
• fairness of the contractual benefits to MRL of driving the new product changes and ensuring that  MRL is treated in the same way as any other Owner with regards to the weeks that they own.

We hope that Owners appreciate that the issues discussed are very complex in nature.  The Owner Representatives have consulted with Brodies who have assisted with the preparation of the pros and cons list included in Appendix II. Some of you may be aware that some other Clubs have simply accepted the MRL Points Proposal without seeking independent advice. The Owner Representatives of the Lochanhully Club are of the view that it is important Owners  make decisions with the benefit of full and frank disclosure of the implications, hence the pros and cons list.

2.     REQUEST FOR FEEDBACK

Some of you may recall that a survey was conducted a few years ago, the result of which showed that a majority of Owners would like to exit the Club within the short term. That survey did not contain pricing proposals, and so it is not clear to your Committee that a majority of members would have the financial means to afford to exit the club on the terms now set out in the MRL Points Proposal. Before a decision is made to proceed with such a major change, which would introduce a significantly different constitutional structure with Owners not being able to exert as much influence on the future direction of the Club, your Committee considered it fair and reasonable to send you the pros and cons before a formal proposal is put forward. We would like to get some feedback from Owners by letter marked for attn.  Chairman Lochanhully Owners Committee  Lochanhully Woodland Club, Carrbridge PH23 3NA or by email at info@lochanhully.co.uk, in each instance including your name and contact details.

Yours truly,

Kenny Griffith

Chairman of the Owners’ Committee – Lochanhully Woodland Club

APPENDIX I

THE NEW MRL POINTS PROPOSAL

Part I: The Proposal

1. The proposal is to convert the Club from its present “fixed apartment/fixed week” basis to a “points” club. In practice, this will involve each timeshare week at the Club being given a “points” value.
2. The points values are intended to reflect the size and design of an apartment and the time of year which an Owner’s week entitles him or her to stay in a particular lodge, i.e. an Owner of a week during peak seasons, for example July, would receive more points than the Owner of a low season week. Each Owner at the Club will cease to own his/her fixed week in a specified apartment and instead will become the Owner of a specified number of points. The number of points which each Owner will receive will  equate to the points value of his/her former fixed week.
3. Points will constitute a currency which the Owner is entitled to redeem each year for a week’s accommodation in an apartment at the Club, provided the selected week has a points value equivalent to, or less than, the number of points held by that Owner.
4. Owners will have a right to reserve a week at the Club on a first-come first-served basis at different times during the calendar year (but see the next Part II as regards transitional arrangements). There will be a right to borrow points from the next year and to carry forward points to the next year (for a fee) and there will also be an opportunity, subject to availability, to use points to reserve accommodation at other MRL resorts which have also converted to points.

Part II: Transitional Arrangements

1. If the Club converts to a points club in 2014, the points scheme will not actually become fully operational until 1 January 2015.
2. Owners will occupy their former fixed week from the date of conversion until the end of 2014, as they would under the current arrangements. In 2015, every Owner will be guaranteed the right to occupy his/her former fixed week in his/her former apartment if that is what he/she wants to do. Alternatively, he/she can use his/her points to reserve another week.
3. From 2016 onwards, all Owners must use points to reserve accommodation in accordance with the points scheme. In the same way that Owners at Lochanhully may be able to reserve accommodation at other MRL clubs which have converted to points, owners at these other clubs will have a reciprocal opportunity to use their points to book accommodation at Lochanhully. However, the Lochanhully Owners will have a one month priority booking window during which only they will be able to reserve accommodation at Lochanhully.

Part III: Exit Arrangements

1. All Owners at Lochanhully will have an opportunity to terminate their membership and leave the Club within a few months of the Club converting to a points structure, whereupon their points will be cancelled.
2. This is conditional upon them not being in arrears with management charges and paying to MRL a termination payment in respect of each Holiday Certificate held which is expected to be four times the current yearly management charge. Three quarters of this payment will go to MRL and one quarter will be retained by the Club for contribution to the sinking fund. Owners who meet the conditions are guaranteed an exit at this time. They will also receive a holiday voucher for each week submitted entitling them to one week’s accommodation at the Lochanhully Club, subject to availability, in each of the subsequent two calendar years.
3. Thereafter, Owners will have an opportunity to request an exit every two years on the anniversary of the exit date agreed in 2014. It is intended that the same conditions will apply but not all Owners who wish to exit are guaranteed to be able to do so. This is because points will only be cancelled in “blocks” which are equivalent in number to the overall points value of a lodge at the Club.

APPENDIX II

POTENTIAL PROS AND CONS OF MRL PROPOSAL

Part I

Pros and Cons for those who DO sign up the new MRL proposal

Part II

Pros and Cons for those who DO NOT sign up the new MRL proposal

For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk