Deer Valley Lodging in a fix

company asks for time from owners to pay them
by Andrew Kirk, OF THE RECORD STAFF
Posted: 03/31/2009 04:12:50 PM MDT

Premier Resorts and its Deer Valley Lodging asked homeowners on Friday to be patient with them in receiving payment for the month of February, and possibly March.
A letter was distributed explaining the credit crisis has been hard on hospitality companies "that rely upon business lines of credit to even out the inconsistencies of their seasonal business operations." The season has been averaging 30 percent below previous years, according to the letter.
"As a result of these factors, our traditional sources of business financing have suddenly become unavailable to us," explained the letter from Premier Resorts director of marketing Bobby Foster. "This extraordinary situation necessitates that we delay payment of current amounts owed to condominium unit owners under our Rental Agency Agreements. (Deer Valley Lodging) plans to pay all owners the full amounts owed as soon as possible."
Trail's End Condo owner Larry Yang said he's owed about $6,800 for February alone and his homeowner's association president told him not to expect payment anytime soon.
In a telephone interview Monday, Foster told The Park Record that it is merely a delay of payment. The property management company is not going out of business and is not going to default on what they owe owners. The company is still accepting reservations and he said they are strong for Easter and advanced bookings for summer look good as well.
"Getting owners paid in full is our first priority. We should have an answer soon. We're aware of the economic environment everyone has to deal with. We're trying to move this as quickly as we can and we're disappointed we got to this position," he said.
Taking care of owners is as important to the success of a vacation rental business as taking care of guests, Foster said. The current situation is embarrassing, but all vacation rental companies operate on thin profit margins, he said.
Premier Resorts president Barbara Zimonja and chief financial officer Brad Goulding saw this as a possible scenario at the beginning of the financial crisis in September, and worked to arrange a line of credit then, but it fell through, he said. The two have been in meetings all week arranging for another line of credit.
Yang said he finds that explanation strange since there is no other time of year when a vacation rental company would be sitting on as much money as they would in late winter.
That's why the 30 percent decline in business has been so detrimental, Foster explained.
"We're dealing with a line of credit as well as lower flow of cash, too. We're working right now to establish credit, as soon as that's in place, our intention is to pay condo owners in full," he said.
As of Monday, it was difficult to say when payment would begin, Foster explained. The company may need to arrange a payment schedule with people until it is caught up. No details can be given until a line of credit is re-established.
Yang said his HOA's contract with Deer Valley Lodging as its management company is expiring, and if he had his druthers, he wouldn't renew with them. The risk is too high. He said the situation and the company's explanation of it was "outrageous" and "odd."
But Yang did not express anger at the company. He said he was mostly concerned about the on-site management staff from Deer Valley Lodging that has always done a great job. He said the people in housekeeping, at the front desk and the general manager have always performed excellent service.
"I'm worried about what will happen to them because of their employer," he added.
A separate letter from Zimonja and Goulding sent to the Park City Board of Realtors explained that Premier Resorts was striving to be "fiscally responsible" by reducing compensation and benefits to the entire workforce, eliminating bonuses and resorting to personnel layoffs.
"Premier Resorts remains a wonderful company and we are pleased to report to you that our employees have been willing to work through this with us," the letter said.
Zimonja and Goulding have also made themselves available to speak with owners directly if they wish, Foster said.