Study shows time-share sales in Isles hit $539M
By Andrew Gomes
Advertiser Staff Writer
Time-share sales in Hawai'i exceeded a half-billion dollars for the first time last year, and the tourism industry welcomed the news as a sign that visitors are committed to returning frequently.
An industry study released yesterday showed time-share sales reached $539 million in 2003, up 16 percent from $465 million in 2002 and a more than two-fold increase over $235 million spent in 1999.
"The time-share industry has experienced extraordinary growth," said Mitch Imanaka, chairman of the Hawai'i chapter of the American Resort Development Association.
Industry officials say the time-share boom is good for the state's hospitality business, bringing repeat customers who tend to travel in larger parties, stay longer and spend significantly more per trip.
Time-share visitors, who have an incentive to use their investment every year rather than waste it, also generally travel when other tourists might not, which helps smooth out seasonal and unexpected ups and downs in Hawai'i tourism.
The study, prepared for the trade association by KPMG LLP and SMS Research, updated a similar one in 2000 and illustrated how strong the local time-share business has become.
• More than 3 million U.S. households own more than 4.9 million time-share weeks. • About 2 percent of Hawai'i time-share owners are from Hawai'i; 30 percent are from California; 1.5 percent are from Nevada. • 41 percent of Hawai'i time-share owners used their property last year; 37 percent exchanged their time to vacation elsewhere; 9 percent didn't use it; 7 percent loaned it to others at no charge; and 5 percent rented it out. • The equivalent of an estimated 3,200 full-time employees supported Hawai'i time-share resort operations and maintenance; sales and marketing supported another 880 positions. • The industry generates annual Hawai'i tax revenue of $82 million, including $51 million in general excise taxes and $6 million from transient accommodations taxes. • County tax revenue from time-share is estimated at $18 million from property taxes, transient accommodations taxes and other taxes. • Hawai'i time-share projects created an estimated $772 million in construction over the past four years, and 2,490 full-time-equivalent construction jobs. • Time-share visitors spend about $627 million a year on food, transportation, entertainment, and other services. • About 61 percent of Hawai'i time-share units were converted from condominium, apartment or hotel units. • Kaua'i has the largest inventory of time-share units, 35 percent of the state total, most converted from condominium or hotel properties sold after Hurricane 'Iniki hurt tourism there in 1992.
The aggressive industry expansion here has been steady for about a decade. But growth has become much more aggressive in the past few years, and now Hawai'i has the fourth-biggest time-share inventory among states, behind Florida, California and South Carolina.
Breaking down the time-share boom
Hawai'i's time-share unit inventory grew from about 2,000 in the early 1990s, to 4,084 in 2000 then to 5,057 last year. Another roughly 700 units are under development, and 2,500-plus more are planned for delivery in the next five to 10 years, the study said.
Imanaka said retailers, restaurants, tour operators and other elements of the state's hospitality industry are benefitting.
"It's good healthy growth," he said. "I think that bodes well for Hawai'i to diversify the product mix we have here as well as the visitor base."
Each time-share vacation party, which is almost exclusively from the Mainland, spent $4,319 per trip on average, 44 percent more than $3,007 spent by the average U.S. tourist party.
Spending was higher because the average time-share group size is three people vs. two for the average visitor last year, and because they stay longer (10.5 days vs. 9.75 days) and have more money to spend because lodging is already paid, Imanaka said.
Development of new time-shares in Hawai'i is largely being driven by big hotel companies, which can make huge, relatively quick investment returns selling 51 shares in every unit as opposed to eking back returns by renting hotel units over many years.
Last year, vacationers bought 20,800 shares of time-share units with an average price of $25,910. The number of units owned represents about 8 percent of the state's 71,000 visitor accommodation units, up from 6.5 percent in 2000.
The study said 524,000 time-share vacationers came to Hawai'i last year, about 8 percent of all tourists, and 12 percent more than those who came for meetings, conventions and incentive trips.
Time-share developers tend to benefit from higher occupancies, which averaged 88 percent last year statewide, compared with 72 percent for Hawai'i hotels.
Another enticement for developers are management fees and associated service revenue from restaurants and other amenities they can collect, while time-share owners pay maintenance costs.
The survey reported that each owner who has use of a Hawai'i time-share unit for one week a year pays an average annual maintenance fee of $640, or an estimated $174 million in total.
Maintenance fees, according to the survey, were the primary concern of prospective time-share buyers.
Hawai'i's $25,900 average price for an annual week at a time-share is nearly double the $14,500 national average.
Still, buyers snapped up time-share property primarily because wholly owned vacation condos cost several hundred thousand dollars at a minimum in Hawai'i.
The demand is attracting more interest from big-name and smaller time-share operators not yet found in Hawai'i, according to Howard Nusbaum, president of the Washington D.C.-based trade association.
The study reported that several luxury time-share operators plan to enter the market, including Ritz-Carlton, which has a project planned at Ko Olina Resort & Marina, Four Seasons and Mandarin Oriental.
New or planned resorts include the 200-unit Worldmark Kihei, 230-unit Marriott Waiohai Beach Club, 280-unit Westin Kaanapali Ocean Resort, 72-unit Holua Resort at Mauna Loa Village and the 120-unit Hilton Grand Vacation Club at Waikoloa Beach Resort.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
