Freaky February: Unseasonal Slump Puzzles Timeshare Resorts, Retailers, Restaurateurs

Harried motorists gridlocked on Marco roads might disagree that tourists are missing the island during high season. But the general business buzz around town is that seasonal traffic isn't filling the tills of timeshare resorts, restaurants and retailers.

Businesspeople have several theories for why this February is financially softer than those of previous years. One is that Hurricane Wilma affected at least four timeshare buildings. Another is that unseasonably warm weather in the Midwest and Northeast is keeping tourists at home. Some say unseasonably cold weather here is hurting the drive market that helps boost timeshare resort occupancy.

And one businessman thinks it's possible the island is becoming more residential — and that locals aren't as free-spending as part-time visitors and tourists.

Timeshare resorts, always an island business barometer because of the retail spin-off for stores and restaurants, report that February occupancy is down from last year. "We've been looking at our budgets to compare growth and pace with previous years," said Phillip Starling, general manager of the Marco Beach Ocean Timeshare Resort. "January was soft against last year, February is behind, and so are March and April."

Starling said he and the general managers of the island's other major timeshare resorts — the Hilton Marco Island Beach Resort, the Marco Island Marriott Resort and the Radisson Suite Beach Resort — have discussed the slump with Jack Wert of the area Convention and Visitors Bureau. "We have been wondering whether the transient market might be thinking hurricanes, even though it's not hurricane season," Starling said.

Wert said the out-of-service timeshare properties are likely a factor, as are the warm Northern weather and Southwest Florida's unusually cold weather. He said accommodation rates are relatively high right now, reflecting the successful season resorts enjoyed last year.

However, "market factors should take care of that situation in the near future," Wert said. Starling said his timeshare resort will waive certain reservation restrictions to remedy slow bookings for March and April.

"We'll be looking at shorter booking times," he said.

Restaurateur Tony Rainone said he is convinced that empty timeshare units are a big factor. "If 1,400 units are going to be vacant until the middle of July, that means about 2,800 people a week are not here spending money," said Rainone, timeshare owner of The Crazy Flamingo, Sushi Blues & Steaks and Nacho Mama's.

"We're having decent weekends, but during the week it's hit and miss," he said. "In the next two weeks, we need good amounts of business."

Gary Elliott, owner of furniture store Interiors Interiors Interiors, said the slump may be partially caused by the island's becoming more and more residential.

Elliott said his store is slammed with orders for high-end interior decoration, but retail is off. "I spoke with a woman who owns a local clothing store, and she said she was also wondering if the island is becoming less of a tourist destination and more residential," said Elliott, head of the Marco Island Area Chamber of Commerce's Business Alliance Committee. "It goes a bit with what I feel."

At any rate, Elliott said, retailers are thinking of introducing winter sales and discounts to boost timeshare business.Elliott said another likely factor is that most people incurred some financial burden after Hurricane Wilma.

"That might have taken money out of their discretionary income," he said.

Westin Casuarina Resort Is Introducing A No Smoking Policy In Timeshares

As of 1st February 2006, the Westin Casuarina Resort is introducing a no smoking policy in all of it's timeshares, including all guest rooms and public areas indoors. The new move is part of a brand wide smoke–free policy in Westin Hotels and Resorts in the US, Canada and the Caribbean. Racquel Miller, Executive Office Co–ordinator at the Westin Casuarina Resort said that there will be outdoor smoking areas; those who wish to smoke will simply have to take that extra step to get out of the timeshare.

The Westing isn't the first property to adopt this policy; The Reef Resort and Comfort Suites already have no smoking policies in timeshares, and only five of the Hyatt's 53 beach guest suites are designated as smoking. The Marriott Beach Resort has a no smoking policy indoors, with only a few guest rooms designated as smoking. The new Ritz-Carlton will have a no smoking policy inside it's timeshares.

Timeshares Are Not For Everyone

Winter is a time when consumers often daydream about getaways to warmer climates, perhaps even owning a time share in Florida or Hawaii. But buyer beware: Deciding whether a timeshare is right for you can be a complicated spending choice.

A timeshare is the right to use a vacation home, often during the same week each year. The pitch is that after the initial purchase, you go on vacation and pay nothing for a place to stay except the annual maintenance fees.

The accommodations, especially at resort time shares, can be more luxurious than a typical hotel room. Time shares often include two bedrooms, a kitchen and clothes washer and dryer. In that way, it's more akin to renting a nice condominium.

Those upsides are usually highlighted during lengthy, high-pressure pitches from timeshare representatives. And they seem to be effective. Timeshare sales rose 21 percent in 2004, to nearly $8 billion, according to the most recent figures from the American Resort Development Association. The number of time-share units is pushing 200,000 in the United States alone, with the average purchase price at nearly $16,000.

If you're considering buying a timeshare, here are 10 things the salesperson may not tell you:

"A timeshare is a lousy investment."

In fact, it's often not an investment at all, in terms of appreciation. Unlike other real estate investments, the timeshare is likely to lose money from the moment you buy it, similar to a new car losing thousands of dollars in value the moment you drive away from the dealership. If you pay $16,000 for a timeshare, you may be hard-pressed to sell it for half that, depending on its location.

"You're not going to get your money back, and shame on the salesperson who sells it to you as an investment," said Lisa Ann Schreier, a former timeshare saleswoman and author of "Surviving a Timeshare Presentation" and "Timeshare Vacations for Dummies."

-- "Our annual fees add up in a hurry."

The purchase price of the timeshare plus closing costs and commissions is just the beginning of its expense. You'll also have maintenance fees, averaging about $400 per year, which likely will rise annually. And you could have separate real estate taxes on top of membership fees, exchange-transaction fees and special assessments for unexpected costs at the resort. You pay these fees regardless of whether you use the unit.

-- "Don't forget about travel costs."

You still have to pay to travel to the time share every year. That's no small cost for someone living on the East Coast with a time share in Hawaii, for example.

-- "Timeshares are complicated."

Buying, owning and trading a timeshare require homework. You need to know the difference between fixed-week, floating-week and points-based systems, as well as leased versus deeded time shares and much more, including knowledge about the location of the time share. Ignorance will end up costing you.

"The timeshare industry prides itself on keeping consumers in the dark until they're in front of the salesperson," said Schreier, who added that time shares can be a good way to vacation for some people, but only if they know what they're doing.

-- "The break-even point is many years away."

One of the allures of a timeshare is that you pay up front and don't have to deal with hotel rate inflation. That's because you locked in the cost of your accommodations for your annual vacation. But do the math.

If you usually pay less than $100 per night for a hotel room on vacation, you'll be hard-pressed to justify a $16,000 time share and its ongoing fees, even assuming high inflation of hotel prices. But the break-even for timeshares shrinks quickly if you would otherwise rent two high-priced hotel rooms every year for your family.

-- "You'll lose vacation flexibility."

The timeshare salesperson will emphasize how easy it is to trade your unit for ones elsewhere. Experts say it's not hassle-free and could require vacation planning a year in advance. And trading costs paid to a timeshare-swap company involve an annual fee of about $100 and a per-transaction fee of up to about $150. Also, if you have a slow-season time share in Pennsylvania's Poconos, don't expect to trade for a prime week in Maui.

-- "Timeshare prices are very negotiable."

"A lot of times, the first price they show you on a time share isn't what they really expect you to pay," Schreier said.

-- "Don't buy the timeshare from me."

Buying a timeshare from a current owner will be far cheaper than buying from a developer's salesperson. At a discount of half price or more, it's a much better value.

-- "I'm offering you lousy financing."

Financing offered through timeshare companies typically has an interest rate of near 16 percent over seven to 10 years, Schreier said. That's higher than many credit cards. If you can't pay cash for the timeshare, it may be a sign you can't afford it.

-- "You'll have a hard time unloading this thing."

Timeshares are notoriously difficult to get rid of, even if you're willing to take a loss.

"If you decide to buy a timeshare or membership in a vacation club, be aware that resales are difficult, if not impossible, because there's no secondary market," the Federal Trade Commission says in a consumer advisory. See more advice and warnings online at www.ftc.gov.

Opposition Builds To Proposed Timeshare or Fractional Ownership

A groundswell of opposition to a new home with multiple owners -- some are calling it a timeshare -- continued to build this week at a meeting of the Hot Springs Village Property Owners' Association board of directors.

The subject came up at the board's work session Feb. 1 when POA general manager Dave Johnston said he'd received a letter from builder Brent Gray's lawyer outlining the legal justification for multiple-family ownership of the home at 62 El Cano Drive.

Johnston said he passed the letter on to the POA's long-time lawyer, Don M. Schnipper, who said Gray's lawyer's arguments concerning a limited partnership had validity. Nevertheless, Johnston said the question remained on how POA privileges would be apportioned among the home's owners.

Ron Tetu, chairman of the new Property Owners United (POU) group, stepped forward to express "our strong opposition to timeshare or multiple ownership" of homes in areas designated for single-family residences.

"If you let this thing go through," Tetu told the board, it would seriously undermine the integrity and character of the community.

"I will fill this room with people who feel the same way," Tetu promised. "We do not want that type of construction in the Village."

Shoemaker turned to Johnston and said: "It's really important you catch up with Cooper" and resolve the issue.

Next came Fred Tadlock, who said he'd once presided over a timeshare association and based on his experience he, too, was declaring his opposition to Gray's plan for a four-bedroom, four-bath, 3,200-square-foot home with multiple living areas overlooking the third green of the Granada Golf Course.

When Tadlock was finished, someone asked Johnston if the POA's property declarations wouldn't prevent development of a timeshare facility in a residential neighborhood.

"The plat map is the controlling document," Johnston said, not the declarations.

The area is platted for single-family homes, and Gray's original application for a building permit said it would be a single-family home.

"We're still exploring this," Johnston said. "I will do my best to get with Cooper."

"If this is allowed to happen," Simon said, "any home in the Village could be converted to a timeshare or anything else."

He said one of the first signs of a deteriorating neighborhood is the conversion of single-family homes into apartments, rooming houses, condominiums and other uses of the buildings.

"I hope you don't let this slip through the cracks," Simon said.

Director Ginna Watson said she was "in total agreement" with Ebner and told Johnston she wanted to see copies of Gray's original application for a building permit, the plat map and all correspondence related to the issue at the next board meeting.

If she didn't, she said she would be one of those sitting with Tetu and the POU in the audience protesting the plan.

Tetu later said the broader issue of POA enforcement of building codes in general is one the POU should investigate.

At a recent ACC meeting, Gray said ownership of the home would become a timeshare under the auspices of a limited-liability company (LLC).

"There will be 10 members to the LLC," he told the panel, and he would be one of the members. "The LLC will be allowed two POA memberships."

Gray has a full-page ad in the Dec.-Jan. issue of Parade of Homes, the Hot Springs Village Board of Realtors publication, saying:

"For about the price of a decent golf-course lot, you can now own a percentage of a fully furnished home on Granada Golf Course which will entitle you to five weeks of usage per year per unit.

"HSV Dreamhomes and Approved Realty are now offering you the opportunity to become a member of a partnership that will allow you to have an ownership position in a new beautiful 3,200-square-foot home on one of the Village's premier golf courses ...

"This home boasts four bedrooms, four full baths, with upper and lower entertainment areas."

Members of the ACC, which is an arm of Cooper Communities, said their problem was obviously not with the building's construction, but that it was clearly a commercial venture in a residential neighborhood.

Gray disagreed.

"It's no different than having a rental unit," he said, "except that it's better (for the community) because with an LLC, the members have a financial interest at stake. We weren't trying to hide anything," Gray said, noting no shares had been sold yet.

Timeshare Image?

For those of us who have been on the sharp end of Time share touts recently, read this drivel and have a smile..

It appears that no one likes them, shame, feel free to comment….

Timeshare firm Sunterra has embarked on a charm offensive in a bid to alter the still-tarnished reputation of the industry in the UK.

The company, which claims 90,000 members in Europe - the bulk of which are in the UK – said it was time bona fide businesses began to actively promote the quality of the product.

No longer is timeshare – or holiday ownership as it prefers to call itself - the domain of barrow boys, but a respected industry with high quality product, Sunterra insisted.

Managing director Dave Harris, the former boss of Going Places, said timeshare in Europe deserves the respectability it already has in the US.

“Timeshare does not have the tarnished reputation in the US as it has in Europe,” he said. “The US has large hotel chains which bring credibility and trust to the industry.

“In Europe there have been some unsavoury tactics. But things have changes and we need to start telling people. The perception is still of fixed week holidays, of getting a hard sell – and worse. We need to start explaining that the industry has moved on.

“The fact is, timeshare is one of the most regulated industries there is.”

Selling tactics have also changed companies offering ‘mini-vacation packages’ for prospective customers to experience the product. “yeah right and then you get nailed to the floor pass on that i think”

“We want to give control to customers,” said European marketing vice president Jim Shannon. “We prefer people to stay in our beds and see resorts before committing. You never buy a car without test driving it.”

No longer is it a fixed-week model, added Shannon. Sunterra members buy points which can redeemed at any of its 90 worldwide resorts.

Success Keeps Timeshare On Top Of Investors' Minds

"Options create opportunity" will be one theme at a panel at the fifth annual Americas Lodging Investment Summit in Los Angeles, Jan. 23-25. The panel will focus on developing and creating successful timeshare, fractional and vacation club ownership projects, according to several members of the panel.

The very name of the panel demonstrates the diverse and growing number of products in the category, with some companies offering a variety of vacation-ownership options within their own portfolios. "There are a lot of different product types out there now," said John Burlingame, executive vice president of Hyatt Vacation Ownership. "That can make the product complex for a developer. But it also creates opportunities to educate customers. The complexity stems from the flexibility which the product has attained."

"With all the products now available, an investor can hold a sort of mutual fund of resorts, and would be able to turn on or off different faucets of investment to maximize any particular trends in seasonality, markets and other variables," said Howard Nusbaum, president and c.e.o. of the American Resort Development Assn. Matt Avril, president and managing director of operations for Starwood Vacation Ownership, said the company offers a variety of options to consumers.

"We can now offer not only multiple brands under the St. Regis, Westin and Sheraton, but we can now offer both fractional ownership and vacation club products," he said. Another choice for investors, Avril said, is to invest with a branded or unbranded company.

"They have to research and understand what the keys to success are for a new developer," he said. "There will always be a place for independent companies in vacation ownership, but developers now have a rich choice of branded products."

Panelists said that timeshare products meshing with current demographic trends are making the industry appealing to many investors.

"Our industry is benefiting from the confluence of several trends: the affluence of our demographic target, greater understanding of the product, and the customer's desire to have a second home experience without the obligation of a purchase," Burlingame said. Nusbaum agreed.

"The first baby boomers to turn 60 do so in 2006 and that will mean a new level of population for the affluent, retirement community," he said. "But they are an active group who like to play tennis and ski, and are looking for places where they can remain active." Interest is strong among investors, according to panelists. "People are always interested in this business," Burlingame said. "They are eager to know out what new opportunities are available."

A question that is sure to emerge at the panel, Avril said, is what constitutes an attractive geographic market and what markets will be successful in the near future.

Financing does not seem to be an issue when it comes to developing timeshare products, but it is expected to be a subject of discussion during the panel.

According to David Wisen, president of resort finance for Textron Financial, questions will arise concerning: how financing for timeshare and fractional projects differ from a traditional hotel loan; how do you structure timeshare and fractional financing; what should a developer keep in mind when requesting financing- "[Capital markets] have accepted timeshare assets, so there will be more and more capital markets execution which will reduce relative rates for borrowers," Wisen said.

Nusbaum said the industry enjoyed more than $8 billion in sales in 2004, and has crossed the bridge from being a niche market. He said Bear Stearns published a report earlier this year showing that the industry now stands as a solid investment in both publicly traded hotel companies and publicly traded companies that are not affiliated with hotel brands.

"Developers are in a position, as in the hotel industry, to enjoy economies of scale by investing in a variety of products," Nusbaum said.

Burlingame cautioned investors to be careful. "Developers are enamored of selling a $20,000 item 50 different times," he said. "That sounds good, but there are so many things that need to be done right."

Wisen said that new products add to the complexity of timeshare. "The introduction of new products such as nonequity destination clubs and condo-hotels will attract the interest of regulators," he said. "Watch for significant developments in the next couple of years."

All responding panelists see their companies and the industry as being in a growth mode. "Timeshare growth will continue for several years as demographic trends indicate," Wisen said.

"Even if you come to this conference as a hotel investor or an institution who wants to learn about the hotel industry and do not consider yourself interested in time share, you will want to understand this product because it has become a part of the mix," Nusbaum said.

Timeshare Clamp In Bahrain

A NEW law regulating the sale of timeshare properties in Bahrain has been proposed by a group of MPs.

The move follows some alleged incidents by Bahrainis who purchased timeshare properties that did not exist.

The MPs say that the sale of apartments, villas, chalets and hotel rooms within and outside of Bahrain should be regulated under clear laws.

"Some nationals have fallen victim to timeshare companies which have not lived up to promises," the parliament said in a statement.

"They have been paying for timeshare property that does not exist."

The MPs want clear rules which would prevent such incidents from occurring in the future and which would clearly regulate all contracts.

Under the proposal, the contracts would have to be filed with a government body and the laws would clearly state the rights of buyers to use and rent property.

The proposal also states that contracts should be drawn in Arabic as well as in the language of the seller and that courts in Bahrain should be able to settle any dispute.

Timeshare properties allow investors to own properties for one or more months a year for a certain period of time.

It can be a cheap way for them to spend their holidays or the properties can be rented out for extra income.

Norwich International Consultants (NIC) chairman and founder member Neil D'Silva welcomed the regulation of the timeshare industry.

However, he said MPs should keep in mind that the industry is regulated inline with international standards and rules.

"The areas which should be regulated locally should involve the granting of commercial registrations and other regulations which prevent dishonest people from scamming the local market."

He said there were timeshare scams happening all over the world in the $9.5 billion timeshare market, which was too huge to ignore, including Bahrain's market.

"The time share concept originated in France in the 1960s and later became popular in the US," said Mr D'Silva.

"By the 1980s it had become a $3bn sales industry with 1.8 million owners.

"As of early last year, it had grown to become a $9.5bn industry and is growing 18 per cent every year."

Mr D'Silva said there were seven million timeshare owners participating in 5,425 resorts around the world. In the Middle East there are only 31,180 and 31 timeshare resorts, over 90pc of which are in Egypt.

"There are no timeshare properties at all in Bahrain so a law regulating it could open up a huge industry," he said.

"Timeshare management companies, owners and developers benefit and jobs are created."

Mr D'Silva said the local real estate market lacks proper supervision and that some kind of strategic real estate committee is needed to monitor it.

Planet Hollywood Teams With Westgate On Timeshare

The worlds largest timeshare company, Westgate Resorts has teamed up with Planet Hollywood to launch a 50-story luxury vacation ownership and condominium tower directly connected to the Planet Hollywood Resort & Casino complex on the world-famous Las Vegas Strip.

The $750 million development will include over 1,200 units ranging in size from one to four bedrooms, increasing the hotel room inventory for the resort by 2,800 rooms. The top four stories of the Towers will be comprised of 28 luxury timeshare condos ranging in size from 4,000 square feet to 10,000 square feet with prices starting at $4 million. The vision for the new Towers was to create a look that was both sleek and glamorous. The color palette is in keeping with the Planet Hollywood brand using red and blue accents to set off the soaring glass building. The Towers, which will be located on the Southeast corner of the complex, at the corner of Harmon Avenue and Audrey, is scheduled to be completed in late 2007. More Las Vegas Timeshares.

Accor Buys Margaret River Timeshare Property

Accor has expanded its presence in the timeshare apartment market in Australia with the acquisition of Basildene Manor in Western Australia’s Margaret River region.

Accor’s Première Vacation Club (APVC) bought the National Trust and Heritage Council-classified building for $4.5 million.

The company will spend the same amount again on extensions to the property.

APVC is a joint venture between Accor Asia Pacific and property developer Becton Corporation.

The company was founded in 2000 and now has more than 8,000 members.

The purchase of Basildene Manor was part of a major expansion program that has seen APVC invest in tourism accommodation in Palm Cove, Sunshine Coast, Gold Coast, Coffs Harbour, Sydney, Snowy Mountains and New Zealand.

Future development plans involve the Hunter Valley, Swan Valley, South Australia, Fiji, and the north island of New Zealand.

APVC claimed that it planned to launch Asian operations during 2006 and expected to acquire or develop properties in such locations as Bali, Malaysia and Thailand during the next few years.

The company claimed membership had grown 86 per cent since the beginning of 2004.

Basildene Manor has 17 suites as well as a main hall, lobby, cellar lounge, terraces, reading room, conservatory, pool, sun deck, tennis court, and a lakeside pergola.