We work hard to keep the resorts looking beautiful and to create unforgettable vacation moments for our members and their families. We look for ways to keep Club Service Fee increases to a minimum, however, this year economic headwinds have had an unprecedented impact on the finances of all our resorts. 

During the Advisory Council meetings, we presented the 2023 financial reports, the 2024 budgets, and explained the need for a Club Service Fee increase due to the combination of several factors.

After exhaustive budget analysis, and to best maintain the properties and ensure the levels of service that our members have come to expect, Management recommended a 15 percent increase for the Club Service Fee for all fixed week and Points members at The Royal Haciendas and The Royal Cancun. In the case of The Royal Sands, the increase was 13 percent due to the resort’s better financial health and larger club cash reserves.

Grand Residences by Royal Resorts Club Service Fee will also have a 15 percent increase for 2024 for fractional owners and points members.

The Royal Cancun does not have an Advisory Council yet and Management sets the Club Service Fee.

The principal factor is the exchange rate fluctuations and the strength of the Mexican peso in 2023. Club Service Fees are paid in U.S. dollars, whereas most expenditures (such as utilities, supplies and team member salaries) are paid in Mexican pesos. As the peso strengthens, the collected Club Service Fees pay for less expenses than budgeted for. The average exchange rate used to calculate the 2023 budgets was 20.94 pesos per dollar (based on the consensus of financial experts in Mexico and the U.S.). However, the average exchange rate for 2023 is forecasted to be 17.68 pesos per dollar, representing a negative exchange rate variation of almost 16 percent and a negative impact to the resort operating budgets that runs into millions of dollars. We expect this conversion factor trend to continue in 2024, causing approximately 12 percent of your Club Service Fee increase to be related to this conversion factor.

Other contributing factors are the continued high inflation rate, which was running as high as 9 percent a few months ago. While it has since fallen to about 5.5 percent, it is not expected to change much in 2024. Inflation has a cumulative effect on payroll expenses and in the 2024 budget we must consider a cost-of-living salary adjustment of 5.5 percent for team members.  This is inclusive of a minimum wage increase that may be up to 20 percent (required by the Mexican government), and associated expenses such as statutory employer contributions to the national Social Security System (IMSS). 

Lastly, in 2023, in response to the increased occurrence of devastating weather conditions in the region, and worldwide, Royal Resorts acquired hurricane insurance and expanded property insurance coverage to “catastrophic damage” coverage, in order to properly protect the owners, the resorts, and their related assets.  However, increased coverage comes at increased cost and the insurance market has been increasing premiums significantly over the past few years based on the claims resulting from these weather events.  The policy will be renewed each year. The reserves in the Hurricane Cash Reserve have been transferred to the resorts’ Club Cash Reserves.