Timeshare additions bolster industry
By Dan Nakaso
Advertiser Staff Writer
The supply of Hawai'i's visitor rooms remained essentially stagnant last year, but a surge in hotel renovations and new timeshare condominiums has analysts optimistic.
The number of units rose just 1 percent, to a total of 72,204, but while there is little new hotel construction, multimillion-dollar renovations are under way in places such as the Aston Waikiki Beach Hotel and Marriott Waikiki Beach, said Joseph Toy, president of Hospitality Advisors LLC.
"What we're really seeing is refurbishment of existing hotels," Toy said. "The market really needs that because we have a lot of hotels that were underperforming. One percent growth means that supply is flat. It's a low number.
"But investment is coming in to renovate existing properties."
The 1 percent change should have little bearing on hotel room rates or the state's transient accommodations tax, or hotel tax, said Murray Towill, president of the Hawai'i Hotel Association.
But new timeshares are being built or considered in places such as Ko Olina on O'ahu, Ka'anapali and Kihei on Maui, and Kona on the Big Island, said Douglas Lupton, who sits on the executive board of the American Resort Development Association of Hawai'i and owns a brokerage firm that helps owners sell their timeshares.
Hotel rooms increased from just 0.6 percent on both Maui and Kaua'i to 1.4 percent on O'ahu and 1.7 percent on the Big Island, according to a study released last week by the state Department of Business, Economic Development & Tourism.
At the same time, the number of timeshares leaped on most islands from 5.1 percent on Kaua'i to 7.8 percent on the Big Island to 8.2 percent on O'ahu, according to the department.
Maui had a 33.7 percent increase in timeshares, the department found.
"The one area where there has been an increase would have to be in the number of available timeshares," Towill said. "They are definitely increasing."
Unlike hotel occupancy rates that run around 70 percent, timeshares are full 90 percent of the time, Lupton said.
"The owner is either using it or they tap into the extraordinary demand for Hawai'i timeshares through timeshare exchange companies," he said.
Timeshare occupancies also seem immune to the aftereffects of Sept. 11, which crippled Hawai'i's tourism industry, Lupton said.
A year ago a separate study by the Department of Business, Economic Development & Tourism predicted that O'ahu alone could see as many as 5,500 more visitor rooms by the end of the decade.
But Toy and Towill said that's unlikely to happen especially given the change in local, Mainland and foreign economies since Sept. 11.
Even matching last year's 1 percent growth for 2002 would surprise Towill.
"Since the economy has slowed worldwide, you're going to have some slowing of growth of new properties as a result of Sept. 11," he said. "You're not going to see an increase along the lines of traditional hotel or resort condominiums. Most of the growth will be in timeshare accommodations."
Reach Dan Nakaso at email@example.com or 525-8085.