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Resort Information Update

Grand Residences

At Grand Residences we work to offer exceptional vacation experiences and the highest standards of service. We know that some of our owners and members have questions about the resort and concerns about the future. During the recent Advisory Council meeting, Management representatives discussed questions that have been received by email and as feedback from a survey conducted by Brian Shecterle, one of your Advisory Council representatives. In this document we will address them.

Overall Resort

Some owners have commented that the fact that Grand Residences is no longer part of Leading Hotels of the World has led to a decline in standards. Residences is no longer part of Leading Hotels of the World has led to a decline in standards. Management assures owners and members that it keeps to LHW standards as a benchmark and strives to go even higher.
   Grand Residences continues to offer fresh flowers and fruit, turndown service, designer brands of bathroom amenities and complimentary private transportation among others.

Resort Maintenance

Owners commented about maintenance and housekeeping issues they had noted during their stay, ranging from light bulbs that needed changing and faulty appliances to cracked tiles on the pool deck. During Maintenance Week this year, the resort was closed to carry out in-depth maintenance in the resort, which included draining and regrouting the main pool and many other equally important tasks (see Exhibit A for a full list of tasks performed).
    Housekeeping is constantly taking inventory of appliances that need to be changed in the units and maintenance is carried out throughout the year. The Resort Manager commented that she will reinforce Housekeeping and Maintenance inspections and with supervisors in charge of checking guest areas to ensure that soap in pool restrooms is regularly replenished to give one example that was mentioned and in which the resort was found wanting.
    In 2021 and this year, some maintenance projects (i.e. sink replacements) have been affected by supply chain issues and have taken longer and a few are still pending.

Owner check-in and check-out

Management is working with the Concierge team to make check-in a seamless process and will address billing issues for owners and their guests with the Front Desk so that they receive separate bills at the end of their stay.

Room amenities

Appliances undergo regular maintenance during the year; however, some now need to be replaced due to age and normal wear and tear. The original models for some appliances, the sofas, sinks and deck furniture have been discontinued and new models were selected. They are being delivered and replaced in units as needed. In 2023, the sofas will be reupholstered with a similar fabric and worn rugs and deck furniture will also be replaced.
    The internet has been upgraded and now permits 30 to 40 mb streaming, the TV has been switched to digital channels, and the plan is to add Roku in the units. Bed linens and duvet covers have also been replaced and hooks have been installed in all the closets. The villa privacy louvers between units were also replaced. The room amenity has been changed to a bottle of tequila with its own Grand Residences seal.
    As part of the in-depth corrective maintenance program, 30 units were completed in 2022.


Restaurant ambiance, variety and food quality

The Italian terrace dining experience was introduced in 2022, in addition to a Nautical Seafood Night, Jazz & Martini Night and a Beach Bonfire for families to enjoy. Taco Tuesday was moved to Heaven Beach Bar to offer another outdoor dining option with live music and Mexican ambiance and the BBQ Night on the Beach features new BBQ sauces from around the world. The Executive Chef, Restaurant Manager and Resort Manager are also working to offer more dining experiences and focusing on quality (including sourcing better steaks and training on steak cooking methods), consistency, presentation and service times with constant training.
   The menus in El Faro and Flor de Canela were changed earlier this year to offer diners greater variety and more may still be done. Other ideas discussed with the Chef and team include offering tableside preparation for some dinner options, sushi at Heaven Beach Bar and Seafood Night and special BBQ offerings, such as grilled fish available poolside during the day. Specific feedback received from owners and members about the need for more gluten free and dairy free desserts, the quality and variety of the salad dressings, adding more daily specials and others has also been shared with the Restaurant team.
    Afternoon tea and the weekly cooking class are available, but reservations are required. Depending on the demand, an additional day can be arranged in both cases. The cocktail class changes location from Heaven Beach Bar to the Lobby Bar depending on the weather. For greater visibility, the suggestion is to do the cooking and cocktail classes on the pool deck. The Food & Beverages management team will work with colleagues in the Concierge department to ensure that owners and members have full details of all the theme nights, live entertainment, classes and other activities offered during the week.
    The terrace floor tiles at Flor de Canela have been replaced with pebble dash and this is also planned for the El Faro terrace. Due to its location and the corrosive effects of salt, Heaven Beach Bar requires constant maintenance to protect the wooden bar, furniture and kitchen appliances. A suggestion was made to install drop down/roll up screens for windy days and this would also help reduce the amount of salt and sand that blows in.
    As part of Phase 3 & 4, two new specialty restaurants will be added to the resort, a steakhouse and a restaurant serving Asian fusion cuisine, both with an outdoor terrace. Management already has the names, logos and design drawings for these two new eateries. A Lounge bar and an Owners/Members only lounge to be located on the second floor of the Lobby building will also be available after the construction is finished.

Owners Cocktail

The weekly Owners Cocktail was restarted in 2022 and all owners are invited. However, we ask that they confirm attendance. A minimum requirement of 20 people was set after several events with low turnout, and this is to avoid food wastage.

Catamaran trip

This was suspended during the COVID-19 pandemic. It was offered by Sales and Marketing and a decision has not been made yet about resuming it.

Grocery store

The Phase 3 & 4 plans include a larger retail area, in the meantime, Management is working to add more product variety in the existing store. Owners would like to see more diet drinks, organic, gluten free, dairy free choices and better fresh produce and fruit.

Spa & exercise room

The current Spa and fitness center were always planned as temporary amenities while the construction of the resort was finished. The Phase 3 & 4 plans include a larger full-service Spa which will offer a wide variety of massages and treatments and will have a wet area, and a bigger fitness center.

Pools

During the resort tour with the Advisory Council, note was taken of maintenance issues in the pool area including tiles and the need to match the color of the grouting.
    To clarify, as of April 1 and by Mexican law, smoking is prohibited in pool areas, on villa terraces and on the presort premises. It is only permitted in designated smoking areas. Information on their locations is available at the Front Desk.
    The Resort Manager adds chairs every year for the pool area to ensure that there are enough to meet demand. When conditions are windy, umbrellas are not put up, however, the Pool Concierges and security guards are always on hand to assist owners and members who would like one opened.
    Owners have priority for sun beds and chairs but Management requests that they notify pool staff if they are not going to use them so that they may be reassigned if needed.
    In Phases 3 & 4 a snack bar will be added in the lap pool area and an additional whirlpool will also be available.

Beach & seaweed disposal

Unlike other parts of the Puerto Morelos shoreline, the beach at Grand Residences is not protected by offshore coral reefs and as a result surf is rougher, this means that our stretch of coast is not suitable for the installation of a sargasso barrier. However, an external company with a tractor works daily for eight hours from May to September to remove seaweed when it washes ashore. This can be extended if required.
    A wider access path to the beach is planned in Phases 3 & 4 to facilitate access for the tractor and speed up seaweed collection.

Weekly activity program

Management will ensure that owners and members receive full details of the activity and live entertainment line up during their stay. Some owners commented that keep fit sessions such as aqua aerobics should not be planned at the same time as other popular activities such as the cooking or mixology classes.

On-site Management

The Resort Manager is happy to meet with owners and members whenever they have questions. Alejandro Lara Guest Service Manager and Claudia Ramirez Owner Service Manager and the Concierge team are also available to help owners and members.

Staff

While owners and members comment on the friendliness of staff and their work, training is ongoing to reinforce departmental procedures, attention to detail, consistency and response times among room attendants, wait staff, bar tenders and kitchen staff.
    Grand Residences is experiencing some staff shortages in the wake of the pandemic as some employees decided to make career changes, moved back to their hometowns, or joined new and larger resorts in the Riviera Maya.
    Recruitment is underway to fill vacancies and new employees undergo a comprehensive training program to ensure that they deliver service to the highest standards.

Concierges

The Resort Manager will work with the Concierge team on improving communication with owners and members so that they always have the information they need on activities and entertainment to enhance their vacation experience.

Access Road to the Resort

The state of the access road to the resort continues to be a concern for some owners. The Puerto Morelos municipal government recently resurfaced the first part of the road leading south from town. The remaining section is within the El Cid condominium and El Cid condo administration is responsible for the upkeep, however it has not been very open to sharing the appropriate improvement cost with neighboring resorts such as Grand Residences. We keep pushing for this to happen.
    In response to owners who asked if Grand Residences could offer golf carts to town instead of a taxi, we regret that we are unable to offer this service as the Taxi Union will not allow private hotel transportation to and from town.
    As part of Phases 3 & 4 of the resort, the plan is to build a bike and pedestrian footpath with lighting from Grand Residences to the entrance of Marina El Cid on the mangrove side of the road.

Royal Resorts Signature Club

While some owners do use the Signature Club, like the services and products it offers and the service offered by Signature Club Member Services, others commented that they do not know about it and the benefits it offers, do not understand it or haven’t used it. Signature Club representatives are always happy to explain the program to owners during their stay and appointments can be arranged with the Concierge. Alternatively, you can email rrsc@royalresorts.com if you need help or want to learn more about your benefits while you are away from Grand Residences.

Rental Program for Owners

We have taken note of feedback, comments and recommendations about the Rental Program for owners and will work on improvements to make renting units an easier process.

Rentals of Grand Residences Inventory

The perception of some owners is that rental rates to stay at Grand Residences offered through online travel agencies (OTAs) such as Expedia are lower, this is not the case. We are very careful with rate parity and review rates in all channels constantly. The average daily rate to stay at Grand Residences is 3 percent higher than in 2019 at US$515.95 and even higher during peak seasons. If members find a cheap rate, we request that they notify us, and we will investigate immediately. It is important to note that often rates advertised in OTAs are not the final rates you pay as hidden costs are revealed when you click to book.
    Forty percent of Grand Residences rentals come through the Reservation Center call center and websites. OTAs like Expedia are not assigned room lots and wholesalers are not used.
    Additionally, the average daily rate charged for Grand Residences stays in the Wyndham booking system is 5.6 percent higher than in other channels. The Registry Collection Hotels franchise agreement has helped increase resort occupancy by 4.1 percentage points. We are reaching a wider audience of potential new Grand Residences owners and members.
    As part of the promotion of Grand Residences, the Vacation Ownership Sales department does use a number of marketing programs, one of which is Privileges Explore Preferred which consists of one discounted first stay at the resort to Royal Resorts members who are prospective buyers as a test drive.

The Registry Collection Exchange

Some owners had negative comments about the international exchange opportunities available through The Registry Collection mentioning that the program is confusing and that it is difficult to get reservations. Others commented that they have never used it. Please contact Signature Club Member Services at rrsc@royalresorts.com if you need help with the program. We will be happy to assist you.

Signature Club Member Services
Signature Club Elite

US Toll Free Number: 1-888-882-9259
Mexico Toll Free Number: 800 681-9247
International: +1 (954) 485-5279

President's Circle Concierge

US & Canada Toll-Free: 1-888-882-9252
Mexico Toll Free: 800-681-9248
International: +1 (954) 485-5109

Resort Design Changes and Construction of Phases 3 & 4

The objective is to complete the resort as soon as possible. Management is working to achieve that goal after the delays caused by the pandemic. The procedures to obtain the Loan are well advanced and we hope to have the Loan secured at the beginning of 2023. Contingent on this being in place, and once building permits have been issued, the plan is to begin construction. Work is expected to take between 18 and 21 months. In preparation for this, soil mechanics studies have been completed and rain wells are already being drilled on site. Grand Residences has also invested in resort infrastructure in the machine house for Phases 3 & 4.
    The Phase 3 & 4 plans include the buildings with reconfigured units II, III, IV to VI, a larger spa with a wet area featuring a steam room, sauna, plunge pools and hot tubs and nine treatment and massage rooms, a two-level gym and resort store, a pool snack bar, an area with six BBQ grills for owners to use, event rooms, a larger resort laundry, underground parking and a wider access path to the beach. The two specialty restaurants, a lounge bar and an owners lounge with an open-air terrace will be in the lobby building on the second floor in the areas that were occupied by the sales room and resort store.
    The ground floor units in the new buildings will be two-bedroom units with a private pool and kitchen and all the top floor penthouse units will retain their original configuration. The two- bedroom units on the other levels will be reconfigured as three smaller suites with kitchenettes according to the proposal that was presented to owners in 2016, submitted to a ballot and approved by the majority.
    Some owners have voiced their concerns about the reconfiguration and fear that there could be overcrowding. Management would like to stress that although the redesign of Phases 3 & 4 includes 20 percent more keys, the total capacity of the resort stays the same. In the redesign, the master bedroom and living/kitchen areas were converted into king size deluxe suites. Because the living/kitchen areas have two murphy beds, the total capacity stays the same even with 20 percent additional keys. The two specialty restaurants and pool snack bar will offer additional dining options.

All-inclusive package

There is a special discounted rate for Grand Residences owners and members who would like to purchase the all-inclusive dining package. As a result of inflation and significant food price rises, this rate did go up to US$91 in 2022. Yet it includes higher quality dishes, ingredients and more options and there are no surcharges for premium items. It also covers restaurants such as Hacienda Sisal, La Trattoria, Los Murales and Kinoko.

Sales & Marketing

With regards to sales programs, both fractional and points memberships are sold at Grand Residences. In 2018, a new Points membership was introduced to boost sales in a changing market and to generate revenue to help complete the resort. The terms of the fractional contract haven’t been modified. The Points membership was launched as a separate product with different terms/contract that do not affect the terms of the fractional contract. Fractional owners still have to abide by the original terms of their contract as do Points members.
    The Points memberships are backed up with inventory. They have a lower entry price point than fractional memberships but require a similar or frequently higher investment to obtain the same level of usage. Points members pay an annual Club Service Fee, and this applies even if they do not use their Points at Grand Residences. In general, Points memberships pay a higher Club Service Fee/Point for premium inventory and mid-high seasons. Overall, Club Service Fee billing for Points memberships is only 1.4 percent less than for equivalent weeks inventory. Points members do not have access to residual rights. Both the Fractional membership agreement and the Points membership agreement are registered in PROFECO, the Mexican Consumer Protection Bureau. To date, 65.6 percent of the built units have been sold. The remaining inventory to be sold is 1,087 intervals.

Regarding the question about the effort and attention from the sales and marketing team to sell and promote Grand Residences programs, Sales Director Jerry Flores shared the following important points.

  1. We have very specific instructions from the corporate office to do the best we can in achieving sales goals for Grand Residences; to date this year we are on target to do so.
  2. Grand Residences and Royal Uno represent around 70 percent of the company's sales.
  3. We offer Grand Residences programs, both fractional and points, in every sales room at the different resorts.
  4. For several years we did not have a sales team on site at Grand Residences.
  5. Since July 1, 2021, Grand Residences has a professional and experienced sales team that has clear instructions that the priority is to sell Grand Residences first, they may also sell other company programs if they think they have to as a second option.
  6. The sales team has more than doubled the sales target for the Fractional program this year.
  7. Marketing has made a special effort to invite more prospects from other Royal Resorts to visit Grand Residences. More than 80 percent of our Grand Residences sales are from Royal Resorts members.

Resale of Units

In reference to an owner question about resales and if fractional owners have the right to sell their fractions without the consent of Royal Resorts, the answer is no. The original contract terms for resales are still enforced.

Grand Residences owners’ lounge

As part of the Phase 3 & 4 plans there will be a private owners’ lounge with exclusive benefits and privileges. This will be open to all fractional owners and in the case of Points members, a minimum of points will be required to access the lounge. The 5,000 points level for junior suite use would not be eligible for use of the owners’ lounge.

Annual maintenance fees

With regards to the annual Club Service Fee, Management understands owners concerns and works hard to keep increases as low as possible while also maintaining high standards. Increases are due to inflation and not because of the number of unsold units in inventory. The company pays for the maintenance fees of the unsold inventory at Grand Residences and as a result maintenance fees will not decrease as more units are sold. A big benefit of a larger finished resort is that there will be economies of scale and it will be possible to build up the resort’s cash reserves in the future. Points Members have the same annual Club Service Fee obligations as Fractional owners.


EXHIBIT A

Resort Maintenance Projects 2022

Here is a list of the maintenance projects carried out during 2022 in guest areas, villas, employee areas and the engine room.


POOLS & JACUZZIS
  • Washing of pool filters
  • Repair and installation of handrails at the family pool
  • Restoration and painting of the spheres in the family pool
  • Tile replacement in the family pool
  • Junction resurfacing of the family pool
  • Repair of pebble floor around the family pool
  • Pool electric dashboard maintenance
  • Rust repair at swimming pool (Lap pool)
  • Rust repair in the shallow part of jacuzzi number 3
  • Resurfacing of junctions in jacuzzis
VILLA POOLS & JACUZZIS
  • Repairs of cracks in the jacuzzi in Villa 501
  • Villa private pool junction resurfacing
  • Replacement of lights in villa private pools
  • Repairs of cracks in the private pool in villas 521 and 526
  • Internal walls and bottom junctions resurfacing for private pools in Villas 101, 119 and 129
VILLA MAINTENANCE
  • Repair of conchuela quarry stone floor in villa 129
  • Replacement of sinks in villas
  • Louvers replacement
  • Floor replacement in the check room
  • Refrigerator door replacement in room, master suite 218
  • Refrigerator replacement in villa 228
  • Painting villa railings
  • Villa furniture maintenance
  • Painting outer wall in villa 522
  • Ceiling repair in villa 427
  • Fabrication of stainless steel doors for the Penthouse terrace
  • Scraping, sanding and varnishing the reception door in villa 101, 102 and 129
  • Terrace maintenance in villa 501
MAIN LOBBY AND TERRACE MAINTENANCE
  • Main lobby dome internal painting
  • Scraping and painting of the Front Desk
  • Lobby terrace maintenance
  • Main lobby ceiling repair
  • Replacement of tiles in the main lobby dome
  • Painting main lobby façade
  • Replacement of lights on the main lobby dome ceiling
  • Maintenance for the wooden bar in the main lobby
COMMON AREAS
  • Replacement of hallway lights
  • Painting walls in the hallways and parking lot
  • Door repair in the Check Room
  • Replacement of the floor in the Building 8 elevator
  • Maintenance of pergolas in all areas
  • Repairs to cracked floors in all areas of the resort
  • Painting and maintenance of walls and all areas around the family pool
  • Painting of the elevators in buildings 1, 11, 10, 9A, 9B, 8 and 7
  • Street light replacement and pole painting
  • Repairs to the tennis court fence
SPA & GYM
  • Maintenance work, Spa foyer
  • Maintenance work, Gym terrace
EMPLOYEE AREA MAINTENANCE
  • Painting of walls in the employee cafeteria
  • Employee bathroom wall repair and painting
  • Painting warehouse walls
  • Exhaust fan turbine replacement in the employee bathroom
  • Maintenance and painting of doors and hallways in the basement
  • Fabrication of casing and base of booster in the employee cafeteria
ENGINE ROOM MAINTENANCE
  • Electric motor maintenance in the reverse osmosis system
  • Electrical motor maintenance
  • Saltwater pump maintenance in the reverse osmosis system
  • High pressure pump maintenance in the reverse osmosis system
  • Reverse osmosis system filter replacement
  • Reverse osmosis system sand filter replacement
  • Deep cleaning Treatment Plant Reactor
  • Pump maintenance in the sewage plant
  • Valve replacement in the sewage pipes
  • Maintenance and painting tank water registers
  • Hydro Variator leak repair
  • Replacement of air elimination valves in the water boiler
  • Cleaning of tank heat exchangers
  • Boilers maintenance
  • Chiller maintenance
  • Chilling machine maintenance at the store
  • Anti-vibration gasket replacement
  • Changes to the pipes in all wells to comply with the new norms issued by CONAGUA, the National Water Commission
  • Backup electric generator maintenance
  • Replacement of the backup generator radiator
  • Replacement of the backup generator battery
  • Electric substation and panel maintenance
  • Electric panel in building 9A
  • Exhaust fan turbine replacement at the Kids Club
  • Stationary gas tank valve replacement
  • Tightening of anti-vibration screws
  • Roller replacement and general maintenance for the Ironing machine in the laundry
  • Laundry fan and coil maintenance
  • Firefighting system pump maintenance
FOOD AND BEVERAGES DEPARTMENT MAINTENANCE
Restaurants
  • Air conditioning coil replacement in El Faro Grill
  • Air conditioner unit maintenance in Flor de Canela and El Faro restaurants
  • Installation of an air-conditioning unit in the pastry kitchen
  • Installation of lights on the terrace at El Faro and Flor de Canela
  • Repairs to the main door at Flor de Canela restaurant
  • Replacement and general maintenance of woodwork in the restaurants
  • Restoration of the wooden bar in Flor de Canela and El Faro restaurants
  • Replacement of wooden window frames in El Faro
  • Restoration of wooden furniture in the restaurants
  • Painting of indoor walls in the restaurants
  • Painting restaurant facades
Kitchens
  • Replacement of expansion valve in the seafood fridge
  • Deep cleaning in the restaurant kitchens
  • Replacement of the bakery chimney
  • Tray repair for the BBQ grill
  • Electrical panel maintenance in Heaven Bar, employee cafeteria and the Flor de Canela and El Faro kitchens