The Park Record Editorial, April 8, 2009
April 7, 2009
When money was flowing a predictable pace, small hiccups in cash flow were relatively easy to cover with short-term loans. But now that businesses are operating within a hair’s breadth of their profit/loss tipping point, and banks are not lending, those hiccups can cause serious problems.
Case in point: At least two large, well respected lodging firms in Park City have notified property owners whose condos they manage, they will not be able to pay rental fees on time. The owners, justifiably, are angry and wondering where the money, that this winter’s guests paid, went.
Officials from both property management companies, Premier Resorts (dba Deer Valley Lodging) and David Holland Resort Lodging say they are scrambling to arrange payment schedules to honor their commitments but those payments will definitely be delayed. That could put many property owners in jeopardy of not being able to make mortgage payments which in turn could have a ripple effect throughout the local economy.
We do not suspect malfeasance — just a failure to anticipate the gravity of this year’s economic downturn. Both companies have been mainstays of the enormously successful Park City tourism economy and their leaders are well-respected members of the community. And they are not alone, in being blindsided by the depth of this recession.
Nevertheless, like the mortgage industry and the stock market nationwide, there have been hints that property management in Utah has been under-regulated. Several years ago when High Mountain Properties declared bankruptcy at the close of the ski season and was unable to hand over rental fees to its property owners, there was a call for tighter regulation over the handling of advance reservation deposits. At the time though, property managers resisted, saying measures like requiring deposits to be held in escrow would hamstring efforts to prepare for the coming season.
But, this time, with two major firms in the same predicament, we believe that property owners may be reluctant to invest in vacation properties in Park City until they regain confidence that they will be well managed.
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Members of the Park City Lodging association and their peers around the state should take heed. Colorado already imposes tighter restrictions on property managers by requiring advance deposits be held in escrow and treating them in much the same way as brokers. If Utah lodging companies want to remain competitive they should immediately begin working with the legislature on some new rules to prevent this from happening again. If they don’t, some angry property owners may do it for them.