The Manhattan Club Threatens a Counter Suit
The Manhattan Club has been making headlines once again in New York City and worldwide; not the headlines any business wants to have; as with any company that has dealings with the public, the club is subject to ridicule and misleading accusations. Most often such ridiculous slander is slung by uneducated klan attacks in perhaps places like ‘The Red Light District’; Not so, in this case.
The recent article on Ct. Watchdog.com has poised The Manhattan Club as a frivolous vulture waiting to spring on the fresh kill recently made of its sales force, completing the desecration of the carcass. This time the attack is of the New York State Attorney General, Eric Schneiderman upon his favorite criminal class, ‘vacation ownership’.
The article makes several accusations and never an examination. The attorney general has opened up an ‘old wound’ with this recent case. A very small number of deeded owners who lost three previous suits against The Manhattan Club, have persuaded the attorney general to utilize his office to denigrate a New York City business, which employs 200+ voters with families to support. It supports area vendors and has 14,000 (give or take) members many of whom are New York State voters that are also affected by this bashing.
One of these accusations is that The Manhattan Club rents condominium style suites to the general public. Any person would be hard pressed to entice the front desk staff to rent them a room for the night, even in a blizzard. The Manhattan club does not rent to the general public. The prospectus may state that it can; it did when the club was new in the 1990’s. This was the marketing approach at that time. Currently there is a marketing promotion that would provide a discounted room in an area hotel if the party agrees to a promotional tour of The Manhattan Club. On the rare occasion that the developer’s rooms are not previously reserved, promotional guests may be reserved for unsold inventory; these guests are not provided with owners’ suites.
The Manhattan Club sells shares of deeded condominium units. There are 286 units, sold in 7 night increments. Many of these earlier owners purchased 7 nights over two, three or four years. These packages provide 2, 3 or 4 nights each year dependant on the package. If each owner did own 7 nights each year there would be 872 un-owned weeks yet available. Since many owners own smaller packages, it is simple to conclude that The Manhattan Club is not over sold.
The watchdog article also mentions ‘high pressure’ sales tactics. The sales office does have high pressure; the steam in the coffee pots. In reality, The Manhattan Club takes pride in not utilizing high pressure sales techniques. High pressure sales tactics are used in many clubs in places such as Mexico or the Caribbean. Potential owners at these clubs are picked up and often driven to remote destinations to attend the sales seminar and are not returned until purchasing agreements are signed.
Guests at The Manhattan Club are treated as the word defines, ‘guests’. They are greeted by professional sales representatives and spoken to respectfully. Guests are provided information to make educated decisions.
Attorney General, Eric Schneiderman allegedly accused The Manhattan Club of using a form of “Bait and Switch”. “Bait and Switch” is defined as a form of fraud used in retail sales. First, customers are ‘baited’ by merchants advertising products or services at a low price; but when customers visit the store, they discover that the advertised goods are not available, or customers are pressured by sales people to consider similar, higher priced items (switching).
In fact, The Manhattan Club makes every effort to provide the best available price. No one is ever baited with a low price since the prices are not published in advertisements, ever. The Manhattan Club does not provide ‘sales priced advertisements’. It is a luxury item. The Manhattan Club is expensive. I would challenge the Attorney General to find an example of ‘bait and switch’ in Manhattan Club advertising. The Manhattan Club is the ‘Lamborghini of timeshare’.
Recently a guest insisted on purchasing a Penthouse, New Year’s Eve package. This package provides the owner suite access each and every year for New Years. There is no availability in Penthouse deeds for New Years Eve; sold out. The guest was offered a smaller suite at a much lower cost for New Years but he only wanted a Penthouse. He wasn’t ‘baited’; the rep tried to persuade the customer to purchase a less expensive unit. If The Manhattan Club was guilty of overselling, the sales rep would have been happy to oblige the guest and sell him a very expensive Penthouse New Years Eve Package that wasn’t available.
The term ‘better than money in the bank’ is mentioned in the Watchdog article as being regularly used during promotional tours. Through many months of working with the sales team at The Manhattan Club, never once have I heard this statement used by anyone for any reason; but then the Ct Watchdog article does stretch even the ridiculous. Bank deposits are guaranteed by FDIC, although there is little or no return on bank deposits.
A deeded purchase, as The Manhattan Club condos is an investment; a real estate transaction and is presented as such. Timeshares in general do differ in this aspect. Some are simply vacation clubs using the term ‘timeshare’. A vacation club can offer an unlimited number of memberships. Memberships are frequently oversold.
There are a limited number of deeds available at The Manhattan Club, as with any condominium. Any deeded purchase must be considered as an investment, just as a home purchase would be. The Manhattan Club sells deeded condominium shares in Mid-Town Manhattan.
Unfortunately the current economy has found even luxury resort owners financially challenged. Some owners have given up their ownership for less than its resale value, many of these were inheritances and others were due to economic hardships. The Manhattan Club does maintain a buyback procedure. A seller must find a viable buyer and agree to a price to legitimize the sale price. The Manhattan Club maintains a thirty day first right of refusal on purchasing the property at that price.
There are many options for an owner to find a buyer; craigslist.org and E-bay.com are popular for timeshare sales. If an owner “let it go to the club for $1” as stated in the Ct Watchdog article, it’s because the owner didn’t want to bother with the listing and sale.
Owners who purchased in the 1990’s received their deeds at very low costs. They used their ownership either at the Mid-Town club or through the international condo exchange program every year since purchased. Some found that due to age or other life situations they were not using their ownerships. It is an owners’ option how they sell what belongs to them.
As like other condominiums, The Manhattan Club has a homeowners’ association. Policy changes can be addressed by the association and/or its board. If owners are finding unavailability of rooms at will it may be due to owner use of bonus nights; additional time at the club for owners to rent. Bonus nights are not available to the general public. Rental income offsets potential H.O.A. fee increases and is controlled by the board of owners not the sales office.
The Manhattan Club provides new owners with a prospectus as required by the S.E.C.. The S.E.C. requires that any mutual ownership of a shared property, i.e.: mutual fund, bond fund or in this case a condominium building. The S.E.C. requires that a prospectus be mailed with 7 days of purchase. The Manhattan Club hands the prospectus to the new owner in most cases, unless the owner chooses to have it mailed. It is then mailed the next business day.
It is unfortunate that the attorney general’s office wants to utilize The Manhattan Club and its crystal reputation as a flagship for his ‘summer scammers’ campaign. The use of such KGB style tactics as secretly taping sales representatives were outlawed years ago. Such tapes are certainly not admissible as evidence in a court of law. Business should certainly be leery of operating in New York State. I wonder if the Attorney General will be seeking reelection.
Christy Harding-Smith is a business consultant and R.I.A. who has been working with The Manhattan Club sales team.