What you Get for your Money

by Linda George
President
Crawford Associates, Inc.

Are you ever reminded how closely your work and home life resemble each other and how often you deal with the same issues in both places? Things like budget restraints, service needs, cost verses value and the constant barrage of advertising material. A responsibility at home and at work is to make the best decisions, with a goal not only to get the most for your money but also to get the best value. Therefore, this article for Resort Owner Associations and Management Companies is focused on “what you get for your money”.

Every Resort Association and Management Company must practice due diligence for their owner members as annual budgets are prepared and approved. Some budget items such as utilities, insurance and taxes are beyond the Board of Directors control yet there are many expenses that should be reviewed to determine “what you get for your money”.

As a service provider myself, the subject of product procurement (a large resort expense) can only be addressed with a sense of logic. Those with knowledge and experience in searching for resort products by volume, quality and value are certain to display such logic. The idea that only the most expensive product will provide the longest useful value is skillfully balanced with the awareness of how long the item will remain desirable. Modestly priced items that are routinely replaced, like carpet and drapes, will provide the best value while premium priced products, like appliances, will save repair and replacement cost over longer service periods. We applaud those who meet the challenge in this fun and exciting field with a keen understanding of “what you get for your money”!

Contracts with service providers are one of the largest budget expenses for a resort and these contracts are all negotiable. Maintenance contracts can be negotiated to get more services for the fees charged or at the least a better quality of service can be demanded. When the contracted housekeeping service charges a fee for cleaning each unit - plus cleaning supplies - and the resort pays another service company for fresh linens, negotiate a lower cost by combining all three with the housekeeping service. Grouping pool and grounds maintenance contracts may also result in a substantial discount for services. Eliminating separate expenses is a benefit in accounting and reduces the number of budget items that must be reviewed each year.

Employees are also a large budget expense either for the resort association or the management company and these employees are vital to a successful organization. Even though this is not a contracted service, failure to obtain the best use of work time and the most productivity from each employee directly affects “what you get for your money”. Avoid using reservations staff to collect a delinquent account or a front desk clerk to process payments when these services are provided under contract. Your skilled resort employees should appropriately refer all contact thereby remaining focused on and productive in their assigned duties.

Outsourcing routine or labor-intensive work is an excellent method for getting the most for your money. A single resort association can benefit from outsourcing to expand resources, allowing them to add an entire billing department or a collections department at a fraction of the cost to maintain in-house staff. Larger resort groups can benefit from peak season support providing excellent cost control measures. There are just no negatives to outsourcing services provided those contracts are carefully scrutinized and negotiated.

Be very cautious of service contracts that charge a fee based on each line item. Even when the fees appear to be nominal, those invoice totals multiply like rabbits! HOA billing and receivable companies typically use these contracts to allow flexibility and selection for each specific service. These contracts often charge a line item fee - PLUS this and PLUS that and PLUS another fee for each additional line item. Such contracts, especially when paying separately for all those PLUSES, must be carefully reviewed to determine “what you get for your money”.

Another method for insuring the best possible services at the lowest possible cost for your resort is to open the bidding for service contracts periodically. Current service providers will work harder to keep your business and continually look for ways to improve their services or reduce their cost. New bids may include additional conveniences, expanded services or grouped discounts that justify a slightly higher cost for those desirable services.

Don’t be afraid to try a new service or a new provider. Express any concerns or hesitations to see how they are addressed and insist on a short-term contract with a clear and precise cancellation clause. Change can be good! And don’t be afraid to contract with small businesses that will really focus on your service needs, build on their operations to meet your requirements and even develop new concepts for providing resort services. Bigger is not always better when considering “what you get for your money”.