- The Washington Times - Thursday, July 5, 2001

More Americans are putting their money into vacation ownership or time shares than ever before, despite the slowing economy.

The nearly $7 billion industry, which allows people to buy a share of a fully furnished resort villa and own it for the rest of their lives, is the fastest-growing segment of the lodging industry.

"Our industry is recession resistant," said Howard Nusbaum, president of the American Resort Development Association, the D.C.-based trade group that represents the vacation ownership and resort-development industries. "Even if the economy putters, people are still going to take [their vacation] because they own it."

Here's how it works: Each condominium or unit in a resort is divided into 50 or 51 intervals or weeks, which are each sold separately. Owners pay a one-time cost depending on the size of the unit, resort amenities, location and the season. They then pay an annual maintenance fee for the upkeep of the property.

For example, an ownership at one of the Marriott Vacation Club International resorts costs on average about $17,500. The Marriott's one-time prices range between $9,000 and $55,000 and then owners pay an annual maintenance fee ranging from about $400 to $700.

Once a majority of the resort is sold, the owners of the individual units collectively become the new owners of the resort and are represented by a homeowners association.

Vacation owners can exchange their weeks and their resort through either the same company with which they own a share of a unit or through outside companies that manage the exchange networks.

Interval International (II) and Resort Condominiums International (RCI) are the two largest exchange-network companies. Nearly every resort is affiliated with one of the two companies.

Miami-based Interval International, for example, charges a $74 annual fee for its members to exchange their weeks with one of its 1,900 affiliated resorts. Members pay an additional $114 to $135 for each exchange.

The fact that the industry is flexible allowing busy consumers to change their weeks and their resorts is one of the driving forces behind a consumer's purchase, Mr. Nusbaum said.

Twenty years ago, 155,000 people owned time shares at 500 or so resorts worldwide. Now, more than 5 million people own time shares in about 5,000 resorts worldwide.

The United States has nearly 2,000 resorts and is home to more than 3.2 million time-share owners. In 1994, 1.5 million Americans owned time shares.

"The product has evolved drastically," said Edward Kinney, senior director of brand and public relations at Marriott Vacation Club International, the largest vacation-ownership company, with 51 resorts and more than 185,000 owners. "It's created a word-of-mouth buzz."

The more-than-30-year-old business has transformed from what was once a shady, unregulated business to a flourishing vacation alternative.

The time-share business started in the late 1960s with the conversion of failed condominium projects into fully furnished vacation spots. At that time, there were no laws governing the industry and consumers were hit with high-pressure sales tactics and unclear disclosures about the properties.

Beginning in the late 1970s, states enacted laws that protected consumers, making the industry much more credible and legitimate, industry officials said.

The industry, however, still makes its money through sales, so companies use enticements like free dinners or free tour excursions just to get consumers to take a look at their resort hoping the visit will result in a sale, said Nancy Zebrick, vice president for industry relations at OneTravel.com.

"I always advise people not to buy on an impulse," she said. "Sometimes, it is high-pressure sales."

Miss Zebrick said the involvement of already-established brands like Marriott has helped the industry turn its reputation around.

In 1984, Marriott was the first hotel-branded company to realize the potential of the time-share business, Mr. Nusbaum said. The company began developing resorts, which included hotel amenities like concierges.

"Instead of having a condominium with furniture it, Marriott designed a luxury condominium product with all the services of a hotel resort," Mr. Nusbaum said.

As more and more already-established brands got involved in the time-share industry like Starwood, Hilton and Disney the industry's credibility grew, Mr. Nusbaum said.

Now the vacation companies are reaping the benefits.

Marriott Vacation Club, part of Bethesda-based Marriott International, has 51 resorts within its worldwide system, including Manor Club at Ford's Colony in Williamsburg the closest location to the Washington area.

In addition, Marriott has multiple resort locations in places like Hilton Head, S.C., and Orlando, Fla.

Marriott Vacation Club raked in more than $700 million in sales last year and expects another 20 percent increase in sales this year. Within a year to 16 months, Marriott will likely reach $1 billion in sales, Mr. Kinney said.

Despite the slowing economy, industry officials say the time-share purchase is a long-term cost saver compared to renting vacations for a lifetime.

Unlike a hotel room, which has rates that usually increase each year, time-share owners pay a one-time price and annual maintenance fees.

"But I don't think it's about money it's psychological," Mr. Nusbaum said. "It's about having the vacation you want."

Marriott photo

Marriott's Grande Vista resort in Orlando, Fla., is part of the booming time-share industry. Marriott Vacation Club International is the largest vacation-ownership company, with 51 resorts and more than 185,000 owners.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide