Timeshare Becomes A Quick Growing Industry

Anxiety beset Donna Iker when she bought a timeshare apartment at Sheraton Vistana Villages on International Drive five years ago.

"I told my husband that I thought it would be too much," said Iker, 57, of Fort Worth, Texas. "We are raising two grandchildren, and it just seemed difficult. But now I think it was the best thing I have ever done."

Initially, she wondered whether the investment would fit her family's lifestyle. And she remembered hearing about timeshare deals gone bad, leaving buyers remorseful and angry. But today, Iker has nothing but good things to say about the decision.

Much has changed since real estate developers began selling real estate in increments of time in the 1970s. Buyers today commonly do business with large corporations, some of which are subsidiaries of the best-known operators in the hospitality sector.

In the past 20 years, timesharing has developed into one of the fastest-growing segments of the real estate industry, with a double-digit annual growth rate and an international presence. Many of the top sales companies have key operations in Central Florida, the industry's home base.

"Central Florida is the time-share capital of the planet, no question about it," said Jim Lewis, general manager of Disney Vacation Development, Walt Disney World's timeshare unit. "It has been a great business for us."

The division has five timeshare resorts at Walt Disney World and two others, one in Vero Beach, the other in Hilton Head, S.C. Disney's sales record demonstrates the power of selling real estate in the fourth dimension: 100,000 buyers have a stake in just 2,000 vacation apartments.

The growth of Disney Vacation Club, as the division is known, mirrors the industry's growth. Major hospitality companies, including Starwood Resorts, Cendant, Hyatt and Marriott, have timeshare operations. In 2004, the most recent year for which statistics are available, there were 1,668 timeshare resorts in the United States owned by 3.87 million households. The number of owners increased 13.8 percent between 2003 and 2004.

Central Florida had 74 resorts, according to the American Resort Development Association (ARDA), a trade group representing time-share developers. That represents nearly 20 percent of the resorts in Florida.

Concept has changed

For developers, selling a condo in 52 weekly intervals can reap big profits. ARDA says that the average price for one-week interest in a U.S. timeshare unit is $15,789.

The proposition seems as attractive to buyers as sellers. Real estate prices in top vacation locales have soared, drastically limiting the number of people who can afford second homes in such places. But timeshares bring down the cost, and limit the overhead, for those who plan to use a vacation home for only a week or two a year.

"The attitude now is why buy a whole pizza when you only need a slice," ARDA President Howard Nussbaum said. "The idea of shared use is more accepted today than it once was."

Baby boomers are more inclined to buy time shares than their parents were for a number of reasons, Nussbaum said. They are less wedded to the idea of exclusive ownership, he said, and like the flexibility that timeshares offer.

In the 1980s, most buyers purchased a condo that they could use one week a year, period. The concept has evolved since then. Today's timeshares are more like currency -- a unit owner can generally stay anywhere in a resort, or trade his time for a vacation at a property elsewhere.

"We have exchange opportunities that allow people to stay at any of 500 other resorts around the world," said Disney's Lewis.

Peter Yesawich, chairman of the Maitland travel marketing firm Yesawich, Pepperdine, Brown & Russell, said acceptance of timeshares is spreading.

"We estimate that 14 percent of the leisure-travel population is interested in purchasing vacation time," Yesawich said. "That's about 9 million households, and that number has gone up 3 percentage points in the last 12 months, which is statistically significant."

Yesawich said the biggest reason people want to buy timeshares is the ability to take vacations in a variety of locations.

"The concept of shared ownership, whether it is ownership of an aircraft or of a condo, is becoming mainstream," said Franz Hanning, head of Cendant Corp.'s timeshare division in Orlando. "We have adapted to the vacation habits of our customers."