Last resort in timeshare tussle with Macdonald

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Last resort in timeshare tussle with Macdonald
« on: March 01, 2004, 07:14:22 »
Law is last resort in timeshare tussle

A DISPUTE involving thousands of timeshare owners and one of Scotland’s biggest hotel groups is poised to spill over into an acrimonious court battle over unpaid fees.

Loch Rannoch Highland Club in Perthshire has been at loggerheads with Macdonald Resorts since last summer after club members removed a lucrative management contract from the subsidiary of the Macdonald hotel and leisure chain.

Macdonald retaliated by barring more than 4,000 timeshare owners, and their families and friends, from entering its flagship Loch Rannoch Hotel next door and from using leisure and marina facilities there.

Now they face a season of uncertainty as a court threat hangs over their heads. Macdonald is understood to be preparing to claw back almost £1m in fees and costs it claims remain outstanding.

However, an overwhelming number of club members voted earlier this month to stay with new managers, Timeshare Management Services Limited.

TMSL is run, in effect, by former committee members of the club and according to one long-standing timeshare owner, represents a last attempt to wrest control of the contract from Macdonald.

Retired solicitor Roger Willis said: "The mean act of continuing to bar everyone from their premises is testament to the treatment the chain has consistently meted out to us. But we are galvanised in our attempt to put Macdonald behind us."

The septuagenarian has travelled back-and-forth for many years to his lochside timeshare, despite living in the attractive location of Ambleside in the Lake District.

Willis claimed under the new regime management fees were 16% lower compared with the last year under Macdonald’s control. Furthermore, had the contract stayed with the hotel group, access to leisure facilities and the hotel itself would now cost the average member about £157 for each lodge week during the season. The only advantage gained would be access to an on-site pool.

TMSL expects to replace most of the facilities, except access to the hotel, within the next couple of years.

Resort manager Margaret Hodge said families now compensated by visiting nearby Dunalastair Hotel and going to pools at Tummel Valley and Aberfeldy.

Also, TMSL reports that demand for the timeshare rentals at Rannoch is outstripping supply. It takes a 20% commission to handle the rentals, compared with the situation under Macdonald when, it claims, commission stood at 40% and at times as much as 70%.

TMSL adds that owners now pay £60 to register a transfer and claims that under the old regime the fee had been hiked up to £690.

Referring to a possible court of session interdict by the hotel chain, Willis said: "We understand the hotel chain now claims that the so-called unpaid fees total close to £900,000, which is ludicrous, with expensive legal bills on top of that. But we will fight it all the way."

For its part, Macdonald will try to prove in the Court of Session a "loss in value" of business caused by the failure by club members to pay back fees. The hotel chain assumed control of the contract in the early 1990s, when it took over former owners Barrett Resorts.

Company secretary Gordon Fraser recently wrote to club members warning that the total cost to them of a successful recovery of unpaid fees "could be over £1m". Macdonald has tried, unsuccessfully, in the recent past to win interdicts to prove its case.

Fraser claimed it was in members’ best interests that the club was managed by a substantial company, such as Macdonald Resorts, one able to provide on-site leisure facilities.

However, a vast majority of members decided otherwise. Club official David Monteith-Hodge said: "Since the decision we have heard nothing from the hotel group.

"We are sitting in a state of trepidation wondering what they are going to do next."

Another timeshare owner, who asked not to be named, added: "There has never been an effective on-site management or maintenance programme since Macdonald took over. In contrast, TMSL had already displayed a keen eye for detail and that’s what we have needed for years."

The row is happening against the backdrop of rumours that the leisure chain is to offload the Loch Rannoch Hotel, one of 15 from the 70 it owns in the UK

that may be sold.

Willis said club members had heard hints that the hotel was to be sold: "This rumour appears to be hardening now that they need cash to fund their latest business venture. It may also be about offloading a hot potato."

Certainly the Macdonald group appears to have bigger fish to fry at the moment. The company is busy preparing a £350m bid with HBOS and private investors the billionaire brothers David and Simon Reuben, for the UK assets of debt-crippled Queens Moat Houses.

The outcome of the bid should be known in about a month. But it is likely to be matched by other contenders, leading to an auction with speculation that the eventual price will be nearer £400m.

The Macdonald group was taken private by founder Donald Macdonald last year in a £620m buy-out. HBOS is a 50% stakeholder, after leading its exit from the stock market. The chain’s portfolio includes more than 100 hotels and resorts in Britain and Spain.

Sandy Gray, chief executive of English-based Timeshare Consumers Association, said the last thing the hotel and leisure chain needed now was a public bloodletting in its own backyard.

"I am glad that at last the owners of the timeshare club at Rannoch have had it confirmed that they are in control," he remarked. "I am already hearing reports that costs are starting to show at a much lower level than when Macdonald managed the scheme.

"There is little doubt that Macdonald has made life hard for the owners who I believe are right in what they are doing and the association is wholly supportive of their actions."

Macdonald Hotels did not reply to calls.