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The Hotel Industry - Timeshare

TACKLES TIMESHARING With lower occupancy rates, a sagging economy, and the changing demographics of travelers, hotel industry officials are constantly searching for ways to fill rooms. One hot topic is timesharing. Long considered the bad boy of the hospitality business, timesharing is coming of age in both size and stature. The entrance of companies like Disney, Marriott, and Hilton has served notice that timesharing is a viable occupancy option for the hotel industry. THE BASICS Timesharing's image of past decades is quickly changing. Many vacationers now view it as a viable and economical option for future vacations.

The timeshare market is exploding. In the past two years, almost 500,000 households have purchased a total of more than 700,000 timeshare intervals. That means there are more than 3 million owners at more than 3,000 resorts worldwide. Contrary to popular belief, a recent survey showed that most of these owners are happy with their purchase. "It is clear that timesharing is gaining in popularity, not only here in the United States, but also across Europe, Mexico, and in South America," says Tom Franks, president of the American Resort and Residential Development Association, the timeshare industry body.

"We expect the industry to double in the next 10 years and the hotel industry will definitely be involved in a big way." Timesharing is the most prevalent form of vacation ownership. Consumers typically buy one or more weeks at a specific resort and can return to that resort every year or exchange it for a week at another resort. Prices currently average around $9,000, with annual maintenance fees of around $300. Vacation timesharing generally takes one of two forms: "Fee" timesharing gives the purchaser permanent rights--in the form of a deed--to the property. About 85% of timeshare resorts sell under fee-ownership agreements. "Right-to-use" timesharing grants the purchaser the rights to the use of the property for an established period of time, such as 30 years. Under this type of timesharing, the purchaser does not receive a deed. Rather than return to their home resort every year, many owners opt to exchange to one of thousands of other timeshare properties worldwide. For a small fee, companies like Resorts Condominiums International or Interval International perform these exchange services for member resorts and owners.

Many owners say this exchange privilege was a key reason for buying. Many hotel chains in the timeshare industry form their own internal exchange system to complement the exchange company services. Hotel companies have found that the basics of timesharing are an ideal fit for filling rooms. They have accomplished this by using existing facilities and services, as well as developing new properties and support structures. Their success stories tell the tale of why and how the hotel industry is tackling timesharing. THE MARRIOTT STORY While timesharing has been in the United States for just twenty years, Marriott has been around for more than six decades. In 1984, however, it entered the timesharing business and has turned the move into a very successful venture. "We looked into it and in theory it was a sound idea," says Bill Marriott. "But, timesharing in practice was often not up to our standards. If we weren't able to effect rigid controls on the quality of timesharing that Marriott offered, we weren't interested in doing it.

" That opportunity came in 1984, when American Resorts--which had recently opened a top-of-the-line timeshare project on Hilton Head Island called Monarch--initiated talks with Marriott. American Resorts' concept of timesharing matched Marriott's, but the company's ability to carry that vision forward required major capital. Marriott had the capital. Monarch's success was an encouraging barometer and Marriott looked to new markets. Orlando was a very logical choice, because Marriott was already constructing a 192-acre resort complex: Mariott's Orlando World Center. Construction of Sabal Palms, the first of two timeshare resorts adjoining Marriott's Orlando World Center, began in February 1986. The resort offered Marriott's customarily luxurious surroundings and by the summer of 1987 the resort had sold all available weeks. Construction of Sabal Palms' sister resort, Royal Palms, began a year later and recently sold out ahead of schedule. Marriott's fourth timeshare project was at Hilton Head Island's signature location: Harbour Town. Construction began in 1987 and was completed in less than a year.

Marriott's Heritage Club at Harbour Town is keyed to the island's exceptional sports facilities. Ownership includes special privileges at three golf courses and the Sea Pines Racquet Club. The 30-villa resort's 1,500-week inventory sold out in July 1988, just nine months after its initial offering. On the heels of this success, Marriott decided to build its third Hilton Head Island timeshare resort, Harbour Club at Harbour Town. Marriott's newest resort on Hilton Head Island is Sunset Pointe at Shelter Cove Harbour, which has already sold out. The resort features 25 timeshare residences, in addition to 86 existing luxury villas. Marriott is also developing a 25-acre oceanfront site for a new timeshare property, which is currently the Hilton Head Inn. The 288-unit property is called Grande Ocean Resort and started with brisk sales in April. Marriott's third Orlando timeshare resort, Cypress Harbour, is a 500-villa property near Sea World.


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