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Hawaii Timeshares Weather Storm: Occupancy at Hawaii
 Timeshares Outpace Hotel Occupancy 88% to 75%

By Robbie Dingeman, The Honolulu AdvertiserMcClatchy-Tribune Regional News

January 17, 2010 --The state's timeshare industry got hit by the financial market meltdown in late 2008 but remains a strong and growing part of Hawai'i's tourism sector, and industry officials say its pre-paid nature makes it more resilient than traditional hotels during challenging economic times.

The head of the American Resort Development Association was in Hawai'i last week, meeting with lawmakers to showcase the economic impact of the timeshare industry through the past two years, which were characterized by an overall slump in the state's No. 1 industry.

Howard Nusbaum, president and chief executive officer of the Washington, D.C.-based trade association, said the industry had enjoyed double-digit increases in revenues for 20 years until the financial crash.

The growth in the number of timeshare units nearly doubled from 4,815 units in 2002 to 8,245 in 2005 before growing more slowly to 8,872 units in 2007.

That adds up to about 10 percent of Hawai'i's lodging inventory. And his association reported contributing $4.5 billion in spending in Hawai'i, with 34,420 jobs and $511 million in tax revenues.

In 2007, the average number of travelers in a timeshare party was 3.2 people staying 10.3 nights, and spending $4,202 per trip.

Nusbaum said the country's aging baby boomers put a higher priority on vacations than previous generations but want the flexibility offered by having a more apartment-like ambience, a place to fix meals, where the parents and children each have some space and time to relax in their own way.

"It's just a better way to vacation," he said, if the parents can sleep in, while the kids eat cereal, watch TV or chat with friends without having to get in line for one bathroom.

Nusbaum said the industry has come a long way since its hard-sell pitch past that sold lower-price rooms to budget-conscious visitors known more for saving money than spending it.

Across the country, he said, timeshare owners report 85 percent satisfaction with this form of vacation.

Although some construction of new units stalled in recent years, Nusbaum pointed to the most recent growth that included the Hilton's Grand Waikikian; and Disney's mixed hotel-timeshare construction at Ko Olina.

By 2007, ARDA reported that the timeshare industry nationwide recorded $10.6 billion in sales, an increase of 6 percent over 2006. But the credit crunch brought that down to $9.7 billion for 2008, and Nusbaum said preliminary figures for 2009 indicate that sales will be closer to $6 billion.

"We've been humbled," Nusbaum said.

In Hawai'i, industry analyst Joseph Toy, president and chief executive officer of Hospitality Advisors LLC, predicts timeshare will remain a steady constant in the visitor industry.

"These are pre-paid vacations," Toy said. The decline in industry revenues hit the whole industry, with Hawaii hotel revenues dropping $1 billion over 18 months.

But timeshare occupancy held up better, he said, with Hawai'i occupancy of timeshare statewide exceeding 88 percent while hotels averaged a little more than 75 percent.

Timeshare is doing "extremely well" in Hawai'i, said Jerry Gibson, area vice president of Hilton Hawaii.

"Since timeshare owners have already paid for their stays, they will still travel regardless of the economy, which really helps out the entire industry and the state of Hawai'i," he said.

At Hilton Hawaiian Village, Gibson said, 2,904 are hotel rooms and 639 are timeshare, which pencils out to 22 percent timeshare.

On the Big Island, that mix is 34 percent timeshare at Hilton Waikoloa Village, with 1,244 hotel and 426 timeshare, he said.

Although foreclosures have affected some timeshares, the industry's Nusbaum said the overall news is good, with 9 out of 10 owners current on their monthly payments.

He traces part of those good numbers to the profile of the average timeshare owner: 48 years old, married with two children and an annual income of $90,000.

One of Nusbaum's reasons for visiting Hawai'i was because of concerns over a Maui General Plan that calls for an official policy of discouraging timeshares. The current recommendation calls for discouraging the conversion of hotel units to timeshares and fractional ownership (which covers shared ownership over a longer time period); and to monitor and manage the amount of and impacts from timeshares and fractional ownership.

Some Maui officials have complained that resort and timeshare development has contributed to overuse of parks, traffic, etc, while employing fewer people than traditional resorts.

Toy said studies indicate that employment actually went up in recent years because those displaced by the Marriott conversion got absorbed by growth of other timeshares.

Reach Robbie Dingeman at rdingeman@honoluluadvertiser.com.

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