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A Comedy of Errors: Part III

As promised, no math this week. But to recap, the foundation I've tried to lay so far in this comedy of errors is this: just because it looks like a duck, walks like a duck and quacks like a duck, it ain't necessarily a duck.
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As promised, no math this week. But to recap, the foundation I've tried to lay so far in this comedy of errors is this: just because it looks like a duck, walks like a duck and quacks like a duck, it ain't necessarily a duck. A condo hotel unit is priced more like a residential condo than a commercial hotel room and therefore, from an investment point of view, bears about as much resemblance to a hotel as a duck does to a rabbit.

After the US Civil War, carpetbaggers from the North descended on the South like Christians invading the Muslim Infidels during the Holy Crusades. Theirs was an adventure based on plunder, wealth and power. Their weapons of choice were rigged laws and bogus tax assessments they used to cheat the defeated southerners out of pretty much the only thing they had left - their land.

With the power of corrupt law enforcement behind them, the carpetbaggers encountered little real opposition. One story, possibly apocryphal, was told about an unctuous little weasel named O'Malley who roamed the hill country of the Virginias duping the locals out of ancestral land lying atop valuable coal deposits.

O'Malley was oily and duplicitous and had more tricks for cheating a man out of his land than street hustlers have for shaking spare change out of tourists in New Orleans. Sometimes he'd pretend to be their friend and front them the tax money they didn't have, only to foreclose a short time later on the incomprehensible mortgage they'd signed. Sometimes he'd tell them bold lies of future riches and get them to partner with him under terms that soon led to O'Malley owning the land outright.

His favourite ruse though was to insult the landowner, to needle the man until, in red-faced frustration, he'd smite the scoundrel a mighty blow. Of course, O'Malley was always accompanied by a paid-off sheriff's deputy who, witnessing this violent assault, arrested the assailant and let the wheels of justice grind him down to inevitable bankruptcy.

On the last day of O'Malley's life, he was angling for one of the prettiest patches of hill country he'd ever seen. The semi-literate hillbilly who owned it traced his claim back several generations to pioneering stock. He was tall and lanky and, like all remote hill people, suspicious of strangers and taciturn in their presence. He'd sold off enough timber and tobacco to raise the cash to pay the newfangled tax bill and he'd turned down an offer to partner with O'Malley.

So O'Malley was deep into insulting the close-mouthed man when his life came to an end. He'd run down his land, thoroughly demeaned the ramshackle house his family called home, called his wife ugly, his children stupid and suggested his mother may not have enjoyed the blessings of a sanctified marriage. The landowner had sat stonefaced through O'Malley's tirade, calmly smoking a corncob pipe and ignoring the increasingly frustrated little man.

So the sheriff's deputy, lurking behind nearby bushes, was particularly surprised when he saw the man jump to his feet, pick up a nearby axe and sink the blade several inches into O'Malley's skull, killing him instantly and nearly taking his head clean off.

After prolonged questioning, all the gentleman had to say was, "He shouldn'ta said that about ma dawg," referring affectionately to a blue tick hound peacefully licking blood off the worn floorboards.

You never know which straw is going to be the final straw.

Notwithstanding their rapacious nature, the final straw for condo owners was not the seemingly indifferent property management companies who managed their investment. What you have to understand about condo hotels is they're owned by people who live almost everywhere in the world... except Whistler. Since they're scattered to the four corners of the planet, they have to rely on someone else to manage their little slice of heaven. Enter the management companies.

During the formative years of the resort, the management companies pretty much had a monopoly on any given property. Whichever company rented or purchased the front desk strata - the front desk being a stand-alone commercial strata like, for example, a pub or restaurant - tended to manage all the units in the building. This is, ironically, exactly what the muni would like to see come out of their efforts to rationalize the front desk dilemma.

But monopolies tend to breed indifference and excess. Management companies sliced 38 to 40 per cent off the top, the gross revenue, of everyone's condo. Maybe that's a fair percentage and maybe that's excessive. Doesn't matter because it was the market and if you didn't like it, you didn't have any real choice except to manage your own condo... which is problematic if you live in, say, Ontario or Hong Kong.

That was just one insult though. The management companies were pretty tight with the strata managers who, since the owners were rarely present for strata meetings, more or less ran things. Rather than take a bottom-line hit on maintenance items, management companies employed creative reasoning to dump as many charges as they could into the grab bag of "common area" expenses, paid for by the strata and reflected in the owners' common area assessments.

That was not the final straw.

The management companies also liked a level of certainty in their future room bookings that could only be achieved by pre-selling whole blocks of rooms to wholesale travel companies, Skican for example, at deep discounts. This wasn't all bad. It boosted the overall numbers of bodies coming to the resort, puffing up the visitor count and making Whistler look like Mecca for vertical-hungry skiers. But for the condo owners, it meant their expensive condo might be rented for $80/night during spring break instead of the rack rate of $230/night.

And then there was the charitable generosity of the management companies who literally gave rooms away for free to jocks and important people who came to freeload during special events, World Cups for example. This was seen as supporting sport and being civic-minded, which is surprisingly easy to do when you're giving something away that isn't yours to begin with.

And even that wasn't the final straw.

The final straw for all the suckers who owned condos that looked like hotels came about when the few real hotels decided they were operating at a disadvantage vis-à-vis the condo hotels and whispered into the provincial taxman's ear. That - which brings us to the muni's misguided efforts - is the real comedy of errors and we'll delve into it next week in the final installment of this opus.

In the meantime, here's a puzzle. How many hotels are there in Whistler? Want a hint? Way fewer than you think. They're a lot harder to spot than a Canuck on a Hawaiian beach in January.