Hotel Online  Special Report

Development Activity for Condo Hotels, Timeshares and Hotels with
Private Residences a Significant Factor in the Lodging
Industry’s Growth for ’06, ’07 and ’08
PORTSMOUTH, NH – December 13, 2005 - Lodging Econometrics released its first Development Forecast for three important specialty sectors of the lodging industry – Timeshare development, Condo Hotels, and for Hotels developing Private Residences.  Patrick Ford, President of LE, indicated that these Pipeline Forecasts for ’06, ’07 and ’08 and beyond predict rapid growth and will be of great interest not only to executives in the lodging industry, but also to developers, investors, lenders, and vendors who operate in the vacation resort industry or who specialize in upscale residential real estate markets.

Ford continued, “We are delighted to be compiling development activity and forecasting new supply additions for these fast-growing sectors where unit owner demand is being driven by easily-accessed lending at historically attractive rates, by thriving residential development in many urban centers and booming second-home development at high-profile resort destinations.”
Timeshare and Vacation Club Industry Shows Continued Growth in ’06 and ’07

In 2006, 39 Timeshare projects are forecasted to open, having 3,998 dedicated Timeshare units while ’07 will have 27 projects/3,699 units.  
The total Timeshare Pipeline currently contains 111 projects being actively pursued by developers with 15,360 units.  56 of those projects are currently Under Construction, 41 are Scheduled to Start in the Next 12 Months, and 14 are in various stages of Early Planning.  41 of the projects contain a total of 3,074 Fractional units.  63% of all Pipeline projects are for new ground-up construction, while 37% are for the unit expansion of existing Open and Operating Timeshare projects.

Casino destination areas are the most popular locations for development with 4,244 units in the Pipeline, or 28% of the total.  Oceanside vacation areas and theme park destinations follow, each having 17% of all Pipeline units, then mountain and ski areas with 16%.  Las Vegas is the most popular market with 26% of all pipeline units, followed by Orlando with 17%.

Marriott’s Vacation Club has 12 company-owned projects with 2,413 units in the Pipeline, while Hilton has four projects with 1,108 units.  Cendant’s two brands – Worldmark and Fairfield have a combined 14 projects/1,327 units.  Ford commented, “Although the branded vacation clubs are developing most of the large projects, Timeshare is still pretty much a fragmented industry with 74 out of 111 projects in the Pipeline being constructed by smaller local and regional developers.”
Condo Hotel Development is Booming

In 2006, 32 projects with 4,831 Condo Hotel units are forecasted to open while 27 projects/5,025 units will open in ’07.

The current Construction Pipeline contains a total of 105 projects with 29,042 condo units, averaging a very high 276 units per project.
44 Condo Hotel projects are currently Under Construction, 41 are Scheduled to Start in the Next 12 Months, and 20 are in Early Planning.  75% of all projects are ground-up new construction, while 25% of the projects will convert existing guestrooms in Open and Operating Hotels to condo units.

The primary purpose of each Condo Hotel project is to function as a hotel servicing regular transient guests.  So, most often, unit owners are required to place their units into a hotel rental program when unoccupied, receiving a share of rental proceeds in return.  Subsequently, Condo Hotels are usually Upscale, Full-service developments focused in the strongest hotel markets:  either popular vacation destinations, or in large cities where suburbanites frequent hotels for business or leisure purposes.

45% of all Pipeline projects are in Oceanside locations, while 10% are near theme parks, and another 9% are at Casino destinations.  Florida has the greatest development activity, with 46% of all Pipeline projects.  Miami, Fort Lauderdale, West Palm Beach and Orlando are the popular locations.  

Ford indicated that Condo Hotels are a significant factor in the lodging industry’s growth because without these products that draw such individual investor participation, large upscale hotel projects could not otherwise be conventionally financed and built so early in the industry’s economic recovery.
Hotel Construction with a Private Residential Component is Exploding

Another proven way to build Luxury and Upscale hotels in the early stage of a recovery is to include private residences for sale in the project.  In the regular Hotel Construction Pipeline, 142 projects are including some form of private residential development – condominium residences inside the hotel and/or condominiums, town houses and single-family homes adjacent to the hotel.

Most all developers will choose a major upscale brand early on as it adds important cachet to the project and communicates a level of amenities and hotel services that often permits developers premium pricing greater than what comparable residential projects in the same community can command, sometimes up to 25% or more.

62% of this type of development is in urban centers or close in suburban locations of large cities where regular residential condominium construction has strong momentum.  Another 20% of the development is at the country’s most upscale oceanside resort destinations.

Lodging Econometrics (LE) of Portsmouth, NH is the real estate authority for the lodging industry.  LE maintains over 80,000 individual database records throughout the U.S. and Canada for: New Construction, Hotels with Private Residences, Reflaggings, Timeshare Development , Significant Renovation Programs, The Census of Open and Operating Hotels, Casino Development, Real Estate Transactions, Condo Hotel Development   

 Amy Hauck
Phone: (603) 431-8740 ext. 19

Also See: The Condo Part of Condo Hotels; A Primer on How to Create a Common Interest Development / David Waite, JMBM / The Global Hospitality Advisor / February 2005
The Timeshare Sector Reporting Revenue Growth for 10 Years Straight; Moving from Dogs to Darlings in the Tourism Industry / July 2004

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