Timeshare Real Estate

Cendant Corporation (NYSE: CD) today announced that its Board of Directors has approved a plan to separate Cendant into four independent, publicly traded, pure-play companies -- one each for Cendant's real estate, travel distribution, hospitality and vehicle rental businesses. The plan is designed to enable shareholders and the four companies to realize Cendant's value, which has not yet been fully recognized by the market, despite the strong operating and financial performance of Cendant's businesses.

Following the proposed transaction, Cendant's shareholders will own 100% of the equity in all four companies. The transaction is expected to be effected through three 100% spin-offs in the summer of 2006. It is expected to be tax-free for the Company and its shareholders.

A Boca Raton resort company has bought a Myrtle Beach, S.C., oceanfront hotel that it will convert into timeshares.

Bluegreen Corp. (NYSE: BXG - News) announced Tuesday that it acquired the 19-story Yachtsman Resort Hotel. The property's 72 studio and 72 one-bedroom units will be converted into 142 one-bedroom timeshares by second quarter 2006.

The Yachtsman will become part of the Bluegreen Vacation Club network and will be renamed SeaGlass Tower. As part of the acquisition, Bluegreen also said it bought additional unsold timeshare inventory in South Carolina and the Gulf Coast of Florida

Also acquired were:
287 weeks of unsold timeshare inventory in buildings adjacent to the Yachtsman; 28 weeks of unsold timeshare inventory at Island Gulf Resort in Madeira Beach and Sand Pebble Resort in Treasure Island management contracts at the Island Gulf and Sand Pebble timeshares.

The timeshare industry wants the town to stop charging a real estate transfer tax on owners who upgrade the quality of their weeks within their complex.

“I am here to emphasize a fairness issue,” said Tobias Weas, counsel for the American Resort Development Association.

Weas and owners at local complexes such as the Valdoro Lodge object to the town collecting its 1 percent real estate transfer tax on upgrades.

Other big Breckenridge timeshare projects include Gold Flake, Grand Timber lodge, the Marriott and Hyatt’s Main Street Station.

An example would be that if an owner upgrades a $30,000 summer week to a $40,000 winter week, current law taxes the entire $40,000 transaction and not the $10,000 upgrade.

Weas said the tax is unfair because the owner is trading the $30,000 week back to the developer to be sold to somebody else, and only paying $10,000.

Weas argued that an upgraded timeshare represents a shift in time, not a bigger piece of real estate.

Councilmembers J.B. Katz and Eric Mamula wondered how that should be treated differently than any other real estate upgrade when under Colorado law the shift is still a deeded transaction.

Weas said the difference is that the upgrades he wants to protect occur in the same complex with the same developer.

He also said the timeshare does not build equity like traditional real estate.

“We are not an equity-building home owning product,” he said. “We are a vacation use product.”

Town manager Tim Gagen said it’s difficult to figure what revenue the town would lose, but in the last two years, timeshare resales generated $108,000 in 2003 and $87,000 in 2004.

Town officials will research how other towns with real estate transfer taxes treat timeshare upgrades and report back to council.

Councilmember Rob Millisor, a timeshare business owner, recused himself from the discussion.

Only real estate professionals who are members of the National Association Of realtors (NAR) can call themselves Realtors. All Realtors adhere to NAR's strict Code of Ethics, which is based on professionalism and protection of the public. That's why all real estate licensees are NOT the same.

Dedicated to serving America's property owners at local, state, and national levels, the NAR The Voice for Real Estate, is the largest professional association at 1 million members strong. So, whether you're buying or selling a home - it pays to work with a Realtor.

If You Do It:

You KNOW you have to advertise to get MAXIMUM EXPOSURE for your property to sell it. So, you place an ad in a major national newspaper. (USA Today minimum rate for 4 lines is $236.00 per day, which is $944.00 Mon.-Thurs!) Your advertising definitely needs to be "national" in scope. Our realtors can get you the exposure you need!

You wait at home hoping an interested Buyer will call you.

When the buyer calls, you have to SELL him on it, tell him how GREAT it is, how much FUN he can have & how much MONEY he'll be saving! Our realtors are experts in the resort industry.

You suddenly realize that Title companies experienced in closing timeshares are few & far between and..... now you begin to wonder what you've gotten yourself into!

You think, maybe you'd better call a lawyer to make sure that your interests are protected.... but...that's really taking money away from what you hoped to net.

Whew! And STILL, the title has to be transferred, the Deed has to be recorded, the funds have to be collected from the buyer! That’s why realtors are your best choice!

If A Realtor Helps:

We advertise daily & reach 12 to 15 million potential buyers! Also, our direct mail operation reaches over 350,000 potential Buyers each month! Realtors receive over 20,000 calls a month from people with an interest in timeshare!

We're open MONDAY-SATURDAY with professional realtors on the phones talking to Buyers, sellers & Renters!

Realtors are knowledgeable & experienced--they know WHAT to say & HOW to say it to get your property sold.

Realtors specializing in reselling individually-owned timeshares and we've dedicated aLL of our company's efforts to the resale industry since 1979.

Realtors know & work with the most expedient title companies in timeshare sales.

Our policy is that every agent is a licensed realtor! And our fiduciary responsibility is to the SELLER!

We know & appreciate what it takes to get a timeshare sold. Realtors do it every day!

"The timeshare industry initially had some reputation problems that started in Florida where [condominium] conversions were the name of the game," said Gloria A Collinson, President of the Toronto-based Canadian Resort Development Association (CRDA). "In Canada, we overcame this by commencing the building of purpose-built just for timeshare and legislation was introduced so fly-by-nights were no longer acceptable. When the Association was formed 25 years ago, one of its purposes was to offset the bad reputation."

Timeshare derives its name from the fact that a vacation owner purchases a share -- usually as weeks -- of the time annually available to use a resort's fully-furnished accommodation unit. The yearly cost of maintenance and management is shared among owners. At a good resort, a very exchangeable week in high-season may cost $20,000.

CRDA represents an industry that spans timeshare, vacation ownership, multi-destination clubs, exchange networks, points programs and, most recently, fractional ownership. This Association has a reciprocal relationship with the American Resort Development Association. Unlike its sister organization, CRDA takes calls from consumers and it may turn down applications from developers that do not meet its standards or that will not willingly abide by its rules.

"One of the things CRDA did was develop a Code of Standards and Ethics which members had to abide to," said Collinson, emphasizing the minimum 5-day right of recision that consumers receive from CRDA members. "Now British Columbia, Alberta and Ontario have legislation. Everyone must comply with what CRDA members have had to comply with for a time."

Ontario's recently-introduced Consumer Protection Act allows timeshare purchasers to, "without any reason, cancel a time share agreement at any time from the date of entering into the agreement until 10 days after receiving the written copy of the agreement."

The additional right of a consumer to "cancel a time share agreement within one year after the date of entering into the agreement if the consumer does not receive a copy of the agreement that meets the requirements under section 27" seems most applicable to purchases made on a credit card, according to CRDA. Since credit card purchases are far from common and are the most easily-eliminated, the impact of this regulation is under investigation.

"The industry at large provides a package that is a very beneficial lifestyle enhancement for those who buy it," said Collinson, referring to the increasingly-popular timeshare and vacation ownership segment of travel. "Our job is to let the public know the benefits [of timeshare] and how to examine what they are being asked to buy. We have an informational website which describes products and services provided by members, gives information about each member and tells [consumers] what they should be looking for."

Although reputable resorts and developers offer value and quality to dissuade consumers from rescinding their contracts, make no mistake about the intention of timeshare salespeople. Since the marketing and sales costs for a timeshare project account for as much as 60 to 65 per cent of costs, salespeople are trained to make the value clear and to request a decision -- yes or no -- during the 90 minutes of attention they ask for from consumers. Gifts and free stays may seem to be the lure, but timeshare professionals believe these people want the lifestyle, they just don't think it's within their grasp.

"The reason [timeshare developers] offer these incentives is that few people wake up in the morning and say 'I'll go buy a timeshare today,' said Collinson, who offers the growth of this industry as proof of the true value behind these and other vacation ownership offerings. "There are more [vacation owners] today than 5 years ago and many more than 10 years ago. There's tremendous growth potential in Canada as 60 per cent of the population has never been to a presentation."

Each vacation ownership program is different and should be examined on its specific merits. CRDA warns consumers to be wary of timeshares that do not own anything. Reputable timeshares own or have the property under their complete control during the period of the consumer contract. Since the two main exchange companies have similar stringent rules, be cautious of timeshares without affiliation to Interval International, or RCI.

Don't buy a timeshare expecting to get a cheap holiday. What you will get for your money is better accommodation -- fully-furnished two bedroom condominiums, instead of a hotel room -- with a wide range of amenities and, through exchange networks, access to almost 100 countries you may only have dreamed of visiting.

Timeshare sales volume, which stood at $4.8 billion in the United States in 2001, has risen consistently during the two decades that this property ownership structure has existed. While many people picture Florida, California and other resort destinations as the locations for timeshares, an increasing number of timeshare developers are focusing on urban markets, and New York City in particular.

The timeshare industry, which has overcome an initial stigma created by problematic developments in the early 1980s, has attracted increasing attention from purchasers who either cannot afford the full cost of a second home, or who want the option to travel to several different vacation destinations without being tied to only one vacation home.

The industry also has benefited from the investments of major national and international hotel chains, which have the experience and resources to focus on the costly marketing aspect of the business. More flexible use plans also have increased interest from prospective buyers. Timeshares will often offer a floating unit, split week or multi-site vacation club use--all of which benefit the users swiftly changing schedules and tastes.

The growth in popularity of urban timeshares has mirrored the renewed interest in urban living and travel to urban locations. Urban timeshares, especially those in the underdeveloped market of New York City, are attractive to vacation users as well as to corporations or individual business people who find that they return to the city on a consistent basis.

While the state of Florida has 363 timeshare resorts, the greatest number in the United States, New York State is home to the second highest number of timeshare purchasers. A deep market of consumers and a worldwide destination with restaurants, theatre, arts and cultural attractions, has made Manhattan a natural location for development.

Not surprisingly, there are three new timeshare projects in Manhattan with others in the planning stages. Developers are seeking to convert existing buildings in whole or part, or to work with developers of upcoming buildings still in the planning stages. Timeshare projects also are providing an exit strategy for underutilized hotels. While developers primarily are interested in sites in the Midtown area, they are also exploring Chelsea and Greenwich Village for possible boutique properties.

A New York City location adds appeal to existing vacation clubs by increasing the pool of options for internal exchange. In addition, an urban timeshare may provide a pied a terre for former city residents who return each year. The Manhattan Club, the first urban timeshare in Manhattan, is very popular with purchasers living within 90 miles of the city.

New York City has always been viewed as a complicated market to enter, based on the complexity of offering plan registration and the costs of development. However, the barriers to entry are being torn down by steadily expanding interest among purchasers.

Ron Baker, a Lafayette, CA real estate investor, purchased a 1,650 square-foot, two-bedroom, two-bath condo timeshare from Marriott Desert Springs Resorts in Palm Desert, CA for $15,000, plus annual maintenance and property tax costs.

For the past 10 years, the agreement has entitled him to use the condo once a year, but he can choose to rent his week away and net about $1,500 after costs.

The rental income potential should make the timeshare attractive on the resale market, unfortunately the industry's resale market is largely disorganized and, as a result, not very profitable.

Baker, a former limited partnership company owner, believes he can change that.

"The biggest objections to timeshares is that owners can't sell them. Right now, you could buy my unit in the secondary market for $15,000, when they are selling phase two for a smaller unit with less amenities for $22,900," said Baker.

Once purchased purely for the enjoyment of their owners and considered a white elephant of a real estate investment, timeshares could soon become a more viable asset with an organized resale market.

Unlike a house, the nation's 2 million timeshares, which cost an average $10,000, don't generally appreciate because vacation club chits or a condo with values that shift seasonally are not easily appraised.

Contracts written before the mid-1990s and before major brands entered the industry, are often so restrictive it's cost prohibitive for owners to list, show, or sell timeshares. Brokers want large commissions and upfront fees to list the time share, or simply refuse to deal in them.

The $3 billion-a-year industry trade group American Resort Development Association (ARDA) offers resale guidelines for developers, but they include hefty disclosure requirements for fees, commissions, advertising methods and data tracking, include the average number of weeks a resale unit is on the market and the number of sales each year.

Still, nearly 300,000 households bought time shares in 1998, and Baker and others have begun to see the value in the cheaper resale timeshares.

Baker's TimeshareNet joins Timesharing Today, All Timeshare, CondoWeb and TriWest Timeshare, among other sites helping timeshare resellers list their timeshare and avoid costly fees -- much as discount real estate agents use the Net for home sellers.

Among the nation's 1,600 time share resorts, some developers, including Marriott, have also begun to offer resales at some of their properties.

In June of 1979, Paul Flory started with The Mariner Group. One of his first objectives there was to create a data-processing system. “I started with one staff member, bookkeeper Gloria A. Brown (now the firm’s senior accountant), and 1,000 timeshare sales, mostly from Casa Ybel Beach and Racquet Club, waiting to be closed. In 1990, when I left as president of Mariner Property Management, Inc., we had 150 employees.”

Flory set up the necessary accounting programs and systems with the help of Tom Matthews, CPA, then-manager of a Fort Myers accounting company that is now part of Coopers and Lybrand, and Dick McKinely of Guardian Title, a former Mariner Group company.

Flory’s Mariner Group responsibilities grew and changed over the years. “My job was to help Mariner’s subsidiaries make money,” he says. “Mariner’s philosophy always has been that each subsidiary had to be self-supporting and show a profit.”

In 1982, Flory was named vice president, administration. “My responsibilities grew to include typical corporate accounting, administrative, and financial aspects, including budgets, financial analysis and infrastructure, forecasting, and tax planning for the Mariner Group subsidiaries.” Flory functioned as an internal consultant to Mariner Group’s subsidiaries and served on the board of directors of Mariner’s furniture and design subsidiary, Robb & Stucky, Inc., and VIP Realty, Inc.

In late 1985, Flory became president of Mariner Property Management, Inc., a standalone firm responsible for Mariner’s timeshare projects and for whole-ownership projects that formerly were part of Marquis Hotels and Resorts.

Reginald D. “Reg” Billups, who started with Mariner about a year before Flory, managed the timeshare owners’ associations and Kim Kreiger (now in Orlando with Hilton) managed the whole-ownership condominium associations.

“In July, 1990, as Paul prepared to leave Mariner to join Island One in Orlando, he wrote a very personal open letter to his Mariner co-workers,” recalls Billups. “Paul wrote that he thought that Mariner Property Management was one of the best management companies in the timeshare industry, and that we were the ones that made it happen. He was proud of each individual MPM staff member. Paul encouraged us no matter what obstacles we faced to continue to operate MPM with honesty, truth, and high ideals.”

At Island One, Flory was president of Island One Resort Management, a management subsidiary responsible for a total of 654 timeshare units at four Orlando-area resorts: 350 at Isle of Bali, 144 at Parkway International, 116 at Orbit One, and 44 at Bryan’s Spanish Cove.

Later he became treasurer of Island One, but continued to participate in owner relations. “Sulyn Stumbras-Sanchez succeeded Paul as president of Island One Resort Management. She so valued Paul’s advice that she asked him to continue attending our four association board meetings,” says Toby S. Smith, director of administration at Island One Resorts.

If you're like most of us, you've no doubt seen the infomercials on television that promise you can get rich buying real estate (usually with no money down). Like the various magic diet aids and wrinkle creams, we wish we could tell you this is absolutely true, but we can't. So what's the scoop? Is real estate a good investment vehicle? For some people it is, but for the large majority of us, the drawbacks may be too great.

The biggest drawback of any investment in real estate is that your investment is not liquid. With the exception of some very small or very desirable-at-any-price properties, you don't just up and sell real estate. Why should you care about how liquid an investment is? Well, because none of us has a crystal ball, and you never know when you might need to get your hands on some cash in return for your investments. Despite your best investment planning, you don't want to be in a situation where you're doing great on paper, but might have to sell at a loss (if you can sell at all) to get a hold of needed funds.

That being said, let's take a look at the different types of investment real estate you might contemplate owning.

Timeshares. If you had to pick the most enjoyable real estate investment, it would almost surely be timeshares. Timeshares are best defined as buying a set period of time (usually one or two weeks) during a certain time of the year at a certain location (for example, a condominium in Florida or a villa in France). What's the advantage for you if you buy a timeshare? You get a fixed vacation cost each year, and you can trade weeks and locations with other timeshare owners in the same company.

Fixer-uppers. You can make money through investing in real estate if you buy houses, condominiums, buildings, etc., that need some work at a bargain price and fix them up. You can probably sell the real estate for a higher price than you paid and make a profit. However, don't underestimate the work, time and money that goes into buying, repairing and selling a home when you are determining whether it will be profitable for you to invest. Also, remember that different tax rules will apply to the purchase and sale of a home if it is not your principal residence.

Rental property. You can buy real estate for rental purposes and receive an income stream from renters. You may also be able to eventually sell the property for more than you bought it for and make a good profit. Although, don't forget that you will now be a landlord who may have to deal with nonpaying tenants and destructive tenants. Even if you have the world's best tenants, you still have to deal with upkeep of the property and any problems that come up. Some investors hire a property manager or management company to manage their investment real estate. This is fine, but don't forget to factor in the management fees when you're calculating your profit from the investment.

Please remember that rental real estate is subject to different tax rules than the home you reside in. You may be able to take tax deductions for losses, capital expenditures and depreciation if you meet certain requirements, but other deductions specific to principle residences may not be available to you.

Unimproved land. Unimproved land is a difficult investment to make a profit in. Unless you manage to buy a piece of land that is extremely desirable at a good price and are certain that it is not barred from profitable use for the neighborhood it is located in (because of zoning or other issues), it will probably cost you more to own the property than you will ever make selling it. (Remember, you will still have to pay property taxes and will also likely incur other upkeep costs on the land, and you won't be receiving any income from rents.)

If you have some sort of inside scoop on a piece of land (for example, the person in the house on the lot next to the land is a wealthy recluse and does not want the property built upon so you can name your price to sell it to him) or plan on developing it yourself (building your home on a piece of property next to a lake), in that case it may be a good investment.

Second homes. Second homes or vacation homes should be purchased primarily for vacation purposes, not investment purposes. Most people end up with a loss on their vacation home properties because even if you can manage to rent the home, the costs of owning the home almost always exceed the rental income it bring in.

The report from the American Resort Development Association (ARDA) suggests that the commitment to vacations that ownership provides creates consistent travelers. Over three quarters (80 percent) of timeshare real estate owners indicate that their vacations are much more consistent since owning a timeshare than before.

The survey asked respondents about how they plan to travel this year. Good news for the battered airline industry is that 78 percent of respondents indicate that they will continue to travel by air, while only 6 percent state that they will not. Nearly half (41 percent) state that they will fly domestically, but not internationally, while one in four (23 percent) state that nothing has changed.

A quarter (24 percent) state that they are more likely to travel by car to a destination they would have flown to in the past, while 39 percent are no more likely to do so.

Timeshare Real Estate Vacationers Benefit Travel Industry

One thing that’s clear about timeshare real estate owners is that they put their investment to good use—creating vacation memories. The survey found that close to 95 of owners used their timeshare weeks in the past year for vacationing. (The data shows that 86.8 percent of owners used them at the home resort or for exchange travel, while six percent offered them, for free or for rent, to friends and family.)

With close to 95 percent of timeshares being used for vacations, that makes for a lot of happy travelers. Just as happy, however, is the positive impact that timeshare vacationers have on neighboring businesses. Consistent travelers mean a steady flow of vacation dollars—a boost for local economies impacted by the recent travel downturn.

Vacationing with friends and family can be one of the best ways to recharge and feel positive about the future. Timeshare owners have this perspective in the bag (packed, of course), with the satisfaction of looking forward every year to a resort vacation.

Florida timeshares are the most luxurious and sought-after real estate in the nation. It's because Florida is so rich with beaches, recreation, ambiance, and friendliness. Use your Florida timeshare property to play golf for a week straight, or to shop for the highest in fashion, or just to lie in the sun.

Florida timeshare resorts are growing as a premier vacation opportunity, as seniors and snowbirds especially prefer to use their Florida timeshares as their winter residences. The advantages of timeshares in Florida include, but aren't limited to, the ability to trade a week in one for another, or to switch between locales each year. A Florida timeshare means you can visit a different beach every year until you find the one that suits you most of all.

The world’s largest timeshare resale brokerage joined with GMAC Real Estate to form International Properties GMAC Real Estate, uniquely showcasing a wide selection of timeshare resorts from around the world. The well known, respected, and trusted GMAC Real Estate brand lends added credibility to the timeshare resale organization. Using proven marketing strategies and techniques, GMAC Real Estate boasts a 94% customer satisfaction approval rating.

Enhanced by the prestige of the GMAC name, the company’s sales increase steadily each quarter. Located in Orlando, Florida, between the Marriott, Ritz Carlton, and Hilton resorts near Sea World and the Orange County Convention Center, International Properties GMAC Real Estate attracts walk-in business from the tourism-heavy area. In addition to pervasive local marketing that draws in foot traffic, the company advertises nationally to continue the tradition of making sales over the phone and through the Internet.

Joining the timeshare resale giant is its sister company, Timeshares Only, the largest timeshare resale marketing agency in the world. Currently, 95% of International Properties GMAC Real Estate’s sales come from the Timeshares Only inventory. The success of International Properties GMAC Real Estate proves the efficiency and effectiveness of associating with a trusted international organization.

International Properties GMAC Real Estate, the world’s largest timeshare resale brokerage, specializes in selling timeshare properties such as Marriott, Hilton, World Mark, Trend West, the Manhattan Club, and other luxurious resorts in locations including Orlando, New York City, Las Vegas, Myrtle Beach, Lake Tahoe, Cancun, Hawaii, Florida, California, Arizona, Aruba, Mexico, and the Caribbean. Utilizing an extensive marketing campaign, International Properties GMAC Real Estate is the premier venue to buy timeshare, sell timeshare, and rent timeshare.

ORLANDO-Locally based BVC Corp., also known as Buena Vista Corp. headed by Sharm Maharaja, has beaten out a dozen competitors in the $47.5-million purchase of the 214-acre Marbella tract one mile from the entrance to Walt Disney World. Meridian Capital Group of New York arranged a three-year, interest-only $40-million loan on the former Ruby Lake Ranch site.


The contract price equates to $221,962 per acre or $5.09 per sf, one of the largest land deals of its kind in Central Florida this year. The seller was RTD-ONE Inc. of Sarasota, a company owned by the family of Donald T. Regan, the late Secretary of the Treasury and former White House Chief of Staff in the Ronald Reagan administration. Regan died in 2003. Marbella is on the west side of Interstate 4, south of Sand Lake Road in south Orange County.


The much sought-after prime tract has been chased by potential buyers for the last eight years, according to GlobeSt.com research. The land has been master-planned for hotels, large retail development, timeshares and themed restaurants. The tract was appraised in March 2003 at $57 million, Regan’s son, Donald T. Regan Jr., told GlobeSt.com in a previously published Oct. 28, 2004 article.


Regan Jr.’s company, Combined Capital Realty Services, represented RTD-ONE Inc. in the transaction. Avi Fuchs and Ari Lieberman of Meridian’s Boca Raton office negotiated the loan for BVC Corp. headed by Sharm Maharaja. Included in the purchase were five acres on the east side of Palm Parkway where 72,000 sf of class A office is tentatively planned, Regan tells GlobeSt.com.


Marbella was originally 270 acres in size, but when it was first sold in 1997, the property was listed at 135 net acres which is also the net size of the BVC purchase. Jean Pierre Cuenant, a Paris-educated lawyer and president of JPC Development Corp. in suburban Winter Park paid $34 million or $125,926 per acre ($2.89 per sf), as GlobeSt.com previously reported.


The deal at that time stood as the largest land transaction in the past five years in Central Florida, based on price. Cuenant had planned to sell off the tract in separate parcels for individual development of hotels, timeshares, retail, restaurants and offices. Half of Marbella was eventually sold off to various developers but the property never attained its projected heights as a premier commercial community, area brokers familiar with the undertaking tell GlobeSt.com.


When Cuenant couldn’t keep up loan payments on Marbella, Regan’s company, Combined Capital Realty Services of Sarasota, bought the property back at a Nov. 1, 2004 public foreclosure sale in Orlando. The senior Regan had initially purchased the tract as a long-term investment under the corporate name of RTD-ONE Inc.

Acting on consumer complaints from three Illinois counties and 18 states, Attorney General Lisa Madigan and the Office of Banks and Real Estate (OBRE) have filed suit to shut down two Quad City companies for illegally contracting with consumers to resell their timeshares, a popular real estate purchase for vacationers.

The companies, which are not even licensed real estate brokers, never listed the properties for sale while collecting approximately $14,000 from the complaining consumers.

Named as defendants are Millennium Vacation Properties II, Inc., d/b/a Millennium Vacation Properties of East Moline and its owner, Shelly L. Reynolds of Rock Island. Reynolds, who also has lived in Florida, is a director in a second company named MS Factory, Inc. d/b/a Millinneum [sic] Vacation Properties. Michael Francesco of Rock Island, a co-director of MS Factory, also is named as a defendant.

Madigan noted that, according to OBRE, neither company is licensed as a real estate broker or timeshare resale agent as required by state law. In addition, both companies are rated “unsatisfactory” by the Better Business Bureau.

“These defendants cold called consumers claiming they were prepared to help the consumers sell their timeshares and that they had ready buyers. In fact, the defendants did not intend to perform any service, nor were they licensed to perform the services they market and sell,” Madigan said. “The bottom line is that these consumers were scammed.”

“This office will not tolerate fraud or deceptive practices such as those alleged against Millennium,” said D. Lorenzo Padron, Commissioner of the Office of Banks and Real Estate. “Unscrupulous individuals or companies should be on notice that we will find them and seek justice on behalf of the citizens of Illinois.”

Thirty-eight complaints have been filed with Madigan’s Consumer Fraud Bureau by consumers who claim the defendants offer their resale services during a telemarketing call. The defendants allegedly found consumers to pitch by cold calling people who listed their properties on the Internet or who were on a list of timeshare owners.

During a call, consumers are told that a title search and appraisal would be necessary at a cost between $199 and $599. An additional fee of $300 would be due at closing. After charging the fees to their credit cards, consumers would receive an information packet that included, among other things, a contract and a “Money Back Guarantee” promising consumers their money back if another company sold their timeshare first. The suit alleges that none of the timeshares were listed or sold and no consumers were reimbursed.

The companies and their officers are charged with violating the federal Telemarketing Sales Rule for making false or misleading statements to convince people to pay for their services. State charges include violations of the Consumer Fraud Act, the Illinois Real Estate Timeshare Act and the Illinois Real Estate License Act.

The suit, filed June 20 in federal district court in Rock Island, seeks a permanent nationwide injunction against the defendants, cancellation of all contracts, full restitution to consumers and a civil penalty of $50,000 and an additional penalty of $50,000 for each violation found to have been committed with intent to defraud. Madigan’s office has received complaints from consumers in McLean, Will and Winnebago counties in Illinois and out-of-state complaints from Arizona, California, Florida, Georgia, Indiana, Kentucky, Maryland, Michigan, Missouri, New Hampshire, New Jersey, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington and Wisconsin.

The timeshare business, once considered the low-rent district of the lodging industry, now looks like a lifesaver for major hotel chains. While U.S. hotel occupancy rates and room rents have yet to recover from the post-9/11 travel slump and the effects of corporate cutbacks, timeshare sales are growing by double-digit rates. And, with aging baby boomers looking for vacation options, there's plenty of room for growth.

Sales of timeshare units increased 12.5% to $4.8 billion in 2001, according to Ragatz Associates, a market researcher in Eugene, Ore. Industry experts expect similar growth for 2002 when the final numbers are tallied.

Between 1991 and 2001, the number of households owning timeshares more than doubled, from 1.18 million to 2.7 million, according to Ragatz Associates. That still represents only 5% of eligible timeshare buyers, hospitality execs say. "Timesharing is just in its infancy," says Troy Jones, manager of Ernst & Young's hospitality group in Los Angeles.

Timeshare development provides a nice antidote to what's happening in the core lodging business. Revenue per available room (RevPAR) plummeted 7.1% in 2001 and was expected to fall 2.6% further in 2002, according to a January report by Ernst & Young's Hospitality Advisory Services.

Meanwhile, average daily room rates were expected to fall 2% in 2002 to $83, which would follow a 1.3% decline in 2001, according to Ernst & Young.

Now, major hotel chains are boasting to shareholders about their timeshare coups. In addition to helping generate cash from sales and financing, timeshare clientele drive revenue for resort restaurants, golf courses and shops.

Marriott International reported that its timeshare division posted revenues of $1.2 billion in 2002, up 20% from the previous year's figure of $1 billion. Marriott's 2002 timeshare sales accounted for 14.3% of the company's overall $8.4 billion in revenue last year, a 6% increase over 2001.

Other hotel companies reported big gains as well in this burgeoning sector. The timeshare division of Starwood Hotels and Resorts Worldwide recorded $98 million in earnings before interest, taxes, depreciation and amortization (EBITDA) on revenue of $363 million in 2002, or a 27% EBITDA margin. Compared with the prior year, EBITDA increased 42.4% while revenues rose 6.7%. Timeshare EBITDA accounted for about 8% of the company's overall 2002 EBITDA of $1 billion, and timeshare revenues accounted for 9.3% of Starwood's $3.9 billion in revenues.

Marc Falcone, a gaming, lodging and leisure analyst for Deutsche Bank in New York, predicts that timeshare divisions will eventually contribute about 10% of a hospitality company's annual profits - up from an estimated 6% to 8% today. "Hotel companies believe it's a business that has significant growth prospects, particularly in markets like Hawaii," Falcone says. "They're committed to growing the business as long as the demand is there."

Rising Credibility

Timeshares allow consumers to buy an annual allotment of time in resort condominiums. Typically, the allotments are broken into weekly intervals; thus, a timeshare buyer of one week is guaranteed use of the condo one week each year. Prices for a timeshare week range from about $8,000 to $50,000, depending on a timeshare's location, size and the level of luxury, amenities and services. On average, a timeshare week cost about $13,900 in 2001, a 6.8% increase from the previous year, according to Ragatz Associates.

Timeshare buyers also can choose to enter into "fractional" timeshares. Fractionals generally are sold in time allotments ranging between two and 13 weeks, and are most common in regional destinations that nearby owners can visit several times a year, says Ed Kinney, a spokesman with Marriott Vacation Club International. Fractionals first appeared in the timeshare industry in the 1980s, but failed to generate much interest until the last couple of years when developers added large doses of luxury to the concept.

In 2001, the average cost of a fractional week in the U.S. was $34,000, while fractional sales totaled $428 million, according to Ragatz Associates. Timeshare execs don't expect to see an explosion in fractional growth anytime soon. Fractionals will remain a specialty product for a small market segment. Of Marriott Vacation Club's 53 timeshare properties, for example, only six are fractionals.

For consumers, timeshares essentially are a second home without the headaches of full-time ownership: A management company oversees the property for an annual fee paid by timeshare owners. In addition, timeshare owners can swap the time they've purchased for time in resorts throughout the world. Exchange companies that provide those services include Resort Condominiums International (RCI) of Parsippany, N.J., a subsidiary of Cendant Corp., and Interval International of Miami.

The phenomenal growth of the timeshare industry coincides with the billions of dollars the major hospitality companies have poured into timeshare development over the past several years. In 1984, Marriott was the first major hotelier to venture into the business, while others such as Hyatt, Hilton, Disney, Four Seasons and Starwood followed throughout the 1990s.

Together with the growth of reputable independent timeshare companies, such as Cendant's Fairfield Resorts, the major hotel brands have helped reverse the smarmy reputation that the industry earned in its early years. Back in the 1970s, the timeshare business was known for high-pressure salesmen and less than scrupulous business practices. Salesmen also sold timeshares as a real estate investment that would generate a profit, when in reality timeshares lost their residual value. That hasn't changed - timeshares generally still lose between 20% and 50% of their value over time.

That's not a problem for the growing masses of middle-aged baby boomers who want the advantages of owning a resort property without the hassles. The target market, according to Ragatz Associates, is boomer families headed by couples who range from age 40 to 59. About half of all timeshare owners have incomes between $50,000 and $100,000, according to Ragatz Associates, and about 35% have incomes of more than $100,000.

About half the U.S. population either falls within that prime age range today or will reach it in the next 20 years, according to U.S. Census figures. While owners are aware that their timeshares' values will depreciate over time, they are attracted by the guarantee of having a room every year and other benefits of ownership, such as exchange programs that let them swap time at resorts around the world.

The presence of the top hotel brands in the timeshare business has led to increased consumer confidence in the concept. "Clearly they have given the business more credibility," says John Burlingame, executive vice president of Hyatt Corp.'s Hyatt Vacation Club in Chicago, which owns eight resorts in the U.S. "And I think buyers are more knowledgeable than ever about the product and see the brands as consistent with what they want for their lifestyle."

The shift away from small-time operators is continuing. Combined, big hotel brands and well-capitalized independent developers now account for 60% of U.S. timeshare sales, up from 40% five years ago. During roughly the same period of time, the number of U.S. timeshare resorts has climbed from 1,200 to 1,600.

Synergy Profits

Typically, timeshares generate returns of more than 20%. Developers not only pocket profits from timeshare sales, but they also make money from interest they receive on five- to seven-year loans they make to timeshare buyers, according to Steven Miner, director of research for Ragatz Associates, which is affiliated with Cendant's RCI timeshare exchange company. Essentially, specialty lenders make consumer financing available to developers, who then pass it on to buyers after adding 300 or 400 basis points to the interest rate. The rates consumers pay have generally been around 14% for the last several years.

Major hospitality brands, however, boast that they can boost timeshare returns by keeping critical sales and marketing costs well below the industry average of about 50% of net timeshare revenues. Although hotel timeshare officials declined to pinpoint how much of that expense they're able to slice off, one big way they do it is by mining membership rosters of their various hotel loyalty programs for potential timeshare buyers.

New York's timeshare sector has seen a significant uptick in activity during the past few years. Three timeshare projects are currently operating in Manhattan with a number of others on the drawing board. Existing regulations, however, are outdated or cumbersome, creating unnecessary obstacles for developers interested in converting residential or hotel properties for use as timeshares or in selling timeshares to New York residents.

Current regulations affecting the timeshare industry were drafted by the New York State Attorney General's office in 1985 and were modeled after regulations governing condo and co-op developments. At the time, there were only a few timeshare projects nationwide. Many of these regulations add unneeded and costly delays, and must be addressed to remove the roadblocks.

One unnecessary delay is added to the sale of timeshare units. A full 15 percent of the total units in the timeshare property must be sold before a timeshare developer can legally close on the first sale. No other state imposes a pre-sale requirement on timeshare units. While this requirement makes sense when dealing with whole ownership condominium or cooperative properties, as long as the timeshare unit is built and taking into account the magnitude of the purchase--$15,000 to $25,000--this rule deprives the customer of getting what he or she paid for on a timely basis.

The regulations also deal with timeshare structures that are now outdated, such as fixed week products. For example, they do not address timeshare point systems. Most of the major hospitality companies have some form of custom-tailored, point-based system that provides the customer with significant flexibility in vacation planning. Owners may utilize their points to reserve stays at other resorts in the vacation ownership system and in some cases, use the points to pay for traditional hotel rooms and even plane tickets.

A real estate developer who surveyed consumers who did not buy his luxury vacation condos believes well-to-do vacationers are coming to the opinion that it's better to "rent their fun" than own it.

Rob McGrath, head of New York-based Private Retreats, says the second home and vacation home markets may be softening - primarily because consumers don't want to have to go to the same place year after year.

McGrath said he started noticing several years ago that the average second home would go back on the market every two or three years. A developer of million-dollar condos in Vail, CO., McGrath also began surveying qualified buyers who did not purchase condos and discovered what he feels is a shift in the market.

"The answers we got started making us think that owning a second home wasn't what it was cracked up to be," he said.

"We found that a lot of people were interest buying second homes with the idea of putting them into a rental pool. What we found, though, was that people weren't getting as much rent as they thought they would, and that it would rent-up whenever they wanted to use it themselves."

He also said his survey of some 2,000 non-buyers suggested maintenance was a problem.

"Even when they have a property manager who handles the big things, we found people didn't like haven't to deal with the knickknacks. They were ending up spending the first two days of their vacations working on the property and usually the last two days, too," he said.

"And then, every December, they were dealing with a six-inch stack of tax paperwork."

"But the biggest single reason we found was that the kids don't want to go anymore. They've been skiing in Vail for the past two years. This year they want to go to Steamboat Springs. So you end up spending $1,000 a night to rent someplace in Steamboat while your place in Vail sits empty."

In a response to what he sees as market demand, McGrath has launched Private Retreats.

The company considers itself a vacation club for the very upscale, with some 60 homes in 12 resort areas spread around the country.

Unlike other clubs that attempt to get as many members as possible, McGrath said Private Retreats is restricting membership to just 400.

"If you think of it like a golf country club, that's a little bit what we're like. A country club limits its membership just a few hundred people. So, if you go out to the golf course during the week, the place is empty. But you need to restrict it so that when members come out and want to play on Saturday morning nobody has a problem getting a tee time.

"We restrict membership so that everybody who wants to go someplace, say, during the holidays, will be pretty much assured of reserving the house they want."

Membership isn't cheap. The buy-in price is $100,000, plus $2,500 per year in dues, plus $150 per house per night.

"That's actually not as much as what it sounds like," says McGrath. "When you consider that condos in top resort locations go for $1,000 per night, when you pro-rate it out its fairly economical."

For your money you stay in a private home owned and maintained by the club. The club already has things like country club memberships, so tee-times are not a hassle. Homes also are staffed by personal butlers and maid services to cater to the whim of the guests.

"We're not an easy box to fit into," McGrath said. "We're not a timeshare. We're not a fractional ownership club. But we are beginning to get a lot of attention from people who are seeing their 'fun' turn into work."

RISMEDIA, Oct. 4, 2005—The world’s largest timeshare resale brokerage joined with GMAC Real Estate to form International Properties GMAC Real Estate, uniquely showcasing a wide selection of vacation properties from around the world. The well known, respected, and trusted GMAC Real Estate brand lends added credibility to the timeshare resale organization. Using proven marketing strategies and techniques, GMAC Real Estate boasts a 94% customer satisfaction approval rating.

Enhanced by the prestige of the GMAC name, the company’s sales increase steadily each quarter. Located in Orlando, Florida, between the Marriott, Ritz Carlton, and Hilton resorts near Sea World and the Orange County Convention Center, International Properties GMAC Real Estate attracts walk-in business from the tourism-heavy area. In addition to pervasive local marketing that draws in foot traffic, the company advertises nationally to continue the tradition of making sales over the phone and through the Internet.

Joining the timeshare resale giant is its sister company, Timeshares Only, the largest timeshare resale marketing agency in the world. Currently, 95% of International Properties GMAC Real Estate’s sales come from the Timeshares Only inventory. The success of International Properties GMAC Real Estate proves the efficiency and effectiveness of associating with a trusted international organization.

International Properties GMAC Real Estate, the world’s largest timeshare resale brokerage, specializes in selling timeshare properties such as Marriott, Hilton, World Mark, Trend West, the Manhattan Club, and other luxurious resorts in locations including Orlando, New York City, Las Vegas, Myrtle Beach, Lake Tahoe, Cancun, Hawaii, Florida, California, Arizona, Aruba, Mexico, and the Caribbean. Utilizing an extensive marketing campaign, International Properties GMAC Real Estate is the premier venue to buy timeshare, sell timeshare, and rent timeshare.