This is an email letter sent to a friend and owner at Flamingo from his direct inquiry to Diamond.
“Thank you for reaching out. Please allow us to update you on the following:
Based on the advice of insurance adjusters, industrial hygienists, remediation specialists and other experts, the decision was made to completely rebuild Flamingo Beach and Royal Palm as a result of damage from Hurricane Irma. Resorts throughout the island sustained varying degrees of damage. Several resorts have been also been closed for an extended period of time with no known timeline of reopening at this time:
Sonesta Maho – to fully open by end of 2019
Simpson Bay Resort – partially open. Three buildings torn down; timeline to rec:onstruction the buildings is undecided
Sonesta Great Bay Beach – no timeline available; reconstruction not yet started
Westin – no timeline available; reconstruction not yet started
Divi Little Bay – to fully reopen end of 2019 into 2020
Belair Beach – to fully reopen in 2020
Oyster Bay Resort – to fully open late 2019 into 2020
Sapphire Beach Club Resort – no timeline available; reconstruction not yet started
Work has been progressing and is on pace to be completed by August 2020.
Current work in progress includes installation of
External corridor walls at both properties
Sliding doors and windows at both properties
Roof replacement at both properties
Installation of new mechanical, electrical and plumbing in all suites
Interior work cannot begin until building is sealed and protected from the elements
As there were no blueprints of either resort, drawings had to be completely redone which took time to complete. Construction could not proceed without the finalized drawings. Additionally, there is no lumber yard or Home Depot nearby from which to purchase building materials. All supplies and materials have to be imported, and with the number of reconstruction projects taking place on the island, it is taking longer to get through the ports than pre-hurricane.
Three model units are under construction – two at Flamingo and one at Royal Palm. The models will be available for viewing mid-May during the annual owners’ meetings.
Currently there are more than 80 workers on site with the expectation of increasing that number to 200 workers by the end of April. The workers are divided between the two resorts to satisfy the various trades needed. This project requires skilled labor which is not readily available on the island. Obtaining local workers proved to be difficult and often non-existent for the various trades needed to rebuild, therefore foreign workers from around the world are needed to fill the void. Obtaining the necessary paperwork for the foreign workers is a daunting and long process. Each of the workers coming from other countries must go through the proper process required by the local department of labor. Obtaining the proper permits to allow the workers on site takes time. If the proper process is not followed, it could jeopardize the reconstruction project. Mobile housing has been shipped in and located on the Flamingo Beach property to house the workers. In addition, all trades cannot work at the same time – first there was demolition, then debris removal, then roof installation. Once the doors and windows are installed and the building protected from outside elements, the interior work (drywall, etc) can begin.
Flamingo Beach was fortunate there was adequate cash flow to cover 2018 insurance premiums and other administrative costs. Owners, including weeks owned by Diamond Resorts and the Trust, were billed a reduced maintenance fee for 2019 because the cash flow was insufficient to cover estimated 2019 expenses. The operating portion of the maintenance fee, as noted in the summary budget enclosed with the billing statement, covers the insurance premiums and some minor administrative costs. It is necessary not only to keep the building insured but to maintain insurance coverage given the difficulty of keeping insurance at all. Premiums increased significantly over previous years due to the number of natural disasters occurring (hurricanes, fires, floods, even volcanoes) across the globe. Even though the resort is not operating, there are administrative costs that occur which would not be paid under the insurance claim, such as owner mailings, audit fees, and credit card charges. The reserve portion of the maintenance fee is allocated to a few projects including the upgrading the waste treatment facility, adding a fitness center and an outdoor hot tub to provide additional amenities, and modifying the studio layout, and enhancing the pool area. The insurance claim is paying to rebuild the resort “like for like”. The claim is in excess of $60 million to rebuild the resort. The only items not covered under the claim are the deductible and any improvements or upgrades that may be considered.
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