January 16, 2012 - 5:45 pm
Diamond Resorts Chief Executive Officer Stephen Cloobeck has discovered his Sunday night appearance on CBS’s “Undercover Boss” also came with some unwanted attention.
The reality television series episode, in which Cloobeck visited several of his Las Vegas-based company’s resorts in disguise, gave dissatisfied owners of Diamond Resorts’ time share properties a vehicle to vent.
More than 100 individuals claiming to be members of Diamond Resorts vacation ownership system sent emails to Cloobeck and the company Monday, asking for refunds and other financial remedies on their investment. Most cited comments made by Cloobeck to the Las Vegas Review-Journal last week in which he said he would return money to unhappy time-share owners.
The vast majority of the concerns focused on The Point at Poipu, a 219-unit time-share resort on the Hawaiian island of Kauai with 13,000 deeded owners. Last year, the homeowners association board asked owners to help pay an estimated $65.8 million to repair water intrusion damage to buildings.
Time-share owners at the development saw their annual maintenance fee payments double or triple, based on the vacation ownership points they had accumulated. Many owners told Diamond Resorts they couldn’t afford the added costs.
“I contacted Mr. Cloobeck’s office late last year to attempt to work out something,” said Ken Anderson of Tucson, who owns two units at The Point at Poipu. “My wife and I are in our late 60’s and could not afford the additional (approximately $7,000) costs over the next two years. That fee is over and above the normal maintenance fees.”
Anderson said he offered to return his deeded weeks to Diamond Resorts at no cost to the company.
“They responded by saying they are not taking any weeks back at this time,” Anderson said.
Angry owners created a website, poipuowners.org, to gather information. They also started anti-Diamond Resort campaigns using social media. Many of the letters sent to Diamond Resorts Monday, which were copied to the Review-Journal, were copied off the aggrieved owners’ Facebook page.
Diamond Resorts, which has more than 200 properties in 28 countries, created its own website, poipufacts.com, to reach out to owners.
The company, according to the website, will pay the largest component of the assessment, nearly $10 million or 15 percent of the total cost of the repairs, which are expected to take five years to complete.
Diamond Resorts said it has communicated with almost 60 percent of the Poipu deeded owners and almost 35 percent of the members who own time shares in the company’s Hawaii Collection. The company said it conducted five special owner informational meetings and has collected more than 63 percent of the first year’s assessments.
Diamond Resorts took ownership of The Point at Poipu when the company acquired Sunterra Corp. in a $700 million buyout in April 2007.
The deal, which was financed by Credit-Suisse and a “sizable personal” investment by Cloobeck, made Diamond Resorts one of the time-share industry’s largest companies. The company’s corporate headquarters are in Las Vegas, where Diamond Resorts has two time shares; the Polo Towers on the Strip and the Desert Paradise Resort on South Decatur Boulevard.
In a statement, Cloobeck said the company has “worked very hard to be diligent” in communicating with The Point at Poipu owners in providing updates.
“We are empathetic toward the needs and circumstances of every owner and member,” Cloobeck said. “In our role as manager of the resort we are in regular contact with owners and members, and we have worked to ensure the plans put in place have the least possible impact on owners and members both in terms of resort usage and financial responsibility.”
On the television show, Cloobeck fixed and painted drywall, handled small maintenance projects, and checked in guests at a few of his company’s time-share developments. At the end of the episode, when his identity was revealed to the employees with whom he interacted, Cloobeck bestowed gifts, including paying off one worker’s mortgage.
Cloobeck called the experience, “unbeatable.”
CBS declined comment on matter.
One letter writer, Jeff Moody of Southern California, told Cloobeck he was impressed with the compassion he showed his employees on the television show. He hoped the CEO would do the same with the owners of The Point at Poipu.
“During the recent recession my family has not been as successful and our income has decreased significantly,” Moody wrote.
“For this reason the changes that have occurred over the last five years at the Point at Poipu with dramatic raises in annual fees and recent assessment have created significant stress and financial hardship in our family and so I would like to sell back our interest in the property.”
Contact reporter Howard Stutz at firstname.lastname@example.org or 702-477-3871. Follow @howardstutz on Twitter.