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ISSN 1940-204X Sea Pines Villa: Are They Ready For The Big One? Margaret N. Boldt, Ph.D., CMA Department of Accounting and Finance Southeastern Louisiana University INTRODUCTION to maintaining this schedule. Other similar businesses have found themselves in disputes with owners and/or guests Sca Pines Villa (SPV) manages and rents 42 vacation villas on over the rental company taking early possession of money, a barrier island near South Carolina. The island is a celebrated premature distribution to owners, and other inappropriate higher-end tourist destination, and business has thrived. From disbursements of escrowed rental monies. SPV has a April through October, SPV books rentals "boutique" style, with guests renting from three nights to three weeks. From mid-November through March, the bulk of rental activity is for monthly occupancies. For the last five years, SPV has enjoyed almost no vacancies except for scheduled deep reputation for both honesty and transparency, and company management believes their success is due, at least in part, to their diligent separation of funds and ensuring all parties are satisfied before disbursement. SPV carns revenues from villa rentals via several different streams. First, guests pay resort fees that cover gate passes to enter the resort, passes to health clubs and swimming pools, and other desirable guest amenities like bicycles and outdoor grills. The amount of the resort fee depends on what amenities the guest wants included with his or her stay and how many cars he or she would like to have while staying at the villa. Guests also pay a reservation fee. The amount of the reservation fee varies cleanings, remodels, owner occupancies, and the like. VILLA RENTALS Guests can book villa rentals by calling SPV directly, using SPV's website, or by going through one of several travel reservation websites where SPV properties are listed. Consistent with industry practice, SPV collects rental monies before the stay. While a small number of guests still with the size of the villa (number of bedrooms and bathrooms). Resort fees, reservation fees, and state and local occupancy taxes are collected with the rental monies and deposited into prefer to write a check, most pay by credit card. Regardless the escrow account. None of the money is received by SPV until the monthly release following the guest's departure. of the method of payment, all of the money collected is immediately deposited into an escrow account and cannot be released (by law) to ecither SPV or the villa owner until after SPV also carns finders fees equal to 20% of cach rental amount (before tax, resort fees, and reservation fees). The the guest has departed. To ensure compliance with all the local and state regulations, SPV has had a longtime practice of releasing money from cscrow once a month. The rental amount of the finders fees depends on the rental amount, which varies with the size and location of the villa, the duration of the stay, and the time of year of the stay. The money is held in escrow until the fifth of the month after the guest departs. For example, a rental for September 25 through October 3 is not released until November 5. While such a lengthy lag is very conservative, SPV is committed owners are responsible for paying the finders fees, and SPV receives this money out of the owners' distributions when the rental monies are released from escrow. IMA EDUCATIONAL CASE JOURNAL 1 vOL. 12, NO. 4, ART. 4, DECEMBER 2019 02019 IMA