Tuesday, June 27, 2006


Timeshare Industry Answers Rising Demand

They pay up front, sometimes $500 to $50,000, for a piece of real estate shared with 51 other people throughout the year.

Instead of renting hotel rooms, nearly 4 million U.S. households opt to pay annual fees to a timeshare management company instead.

Undeterred by the price or concept of sharing, timeshare owners are members of a growing group fueling investments in an industry once characterized by hard sells and schemers, now dominated by familiar hotel brand names.

They also contribute hundreds of dollars in annual fees to the resort's timeshare owners association, and those fees increase each year.

They can trade weeks or sell them, but several hundred a year just stop paying for their Riverside County vacations. One such person is Isabel Long, of Gardena, who bought a Lawrence Welk's Desert Oasis timeshare in 1991 that foreclosed this year.

"They have a maintenance fee and then they had extra maintenance fees," she said. "You have the property all paid for, but the maintenance fees were higher than the property fees."

As her children grew up, she used it less and less and eventually opted to stop paying when the fees became unbearable.

Lawrence Welk's Desert Oasis bought back 173 time shares in foreclosure sales during just the past 10 months through April, county property records show. But the number didn't faze the Cathedral City resort.

"We're basically getting fresh blood," said General Manager Bill Palmer. "While (the foreclosures) may look like a large amount, as a percentage it's small," he said, referring to the 8,000 total owners at Lawrence Welk's Desert Oasis. He said maintenance fees are usually raised 3 percent to 5 percent annually.

Joe Takacs, president of Vacation Resorts International, which manages the Sands in Indian Wells, said the industry still faces misperceptions from buyers who expect their time share's value to appreciate. When it can't be resold for the owners' asking price, sometimes they give up, stop paying fees and let it foreclose, he said.

"You have a timeshare owner who wants $20,000 for a $10,000 timeshare ... the second they drove off the lot, it's worth half of what they bought it for," he said.

Despite regular foreclosures and the growing popularity of condo/hotels, where vacationers buy the whole unit the way they would a second home, the industry is growing faster and filling more rooms than hotels, the timeshare industry's main lobbying group said. Timeshares boast occupancy rates above 80 percent nationwide and $7.8 billion worth of sales, according to the American Resort Development Association.

It's difficult to compare the industry to hotels because the transaction involves buying real estate, not just renting a room for the night.

Hotels had a 63.1 percent occupancy rate nationwide last year, according to hospitality tracking firm Smith Travel Research, earning much more than timeshares, $22.6 billion in sheer profit and $122 billion in total revenue.

According to the American Resort Developers Association, 3.8 million U.S. households owned one or more timeshares in 2005. The number rose when 466,801 signed up in 2004.

Despite the industry's colorful past, characterized by promotional ploys involving free drinks or a vacation in return for listening to a pitch for a few hours, ownership has increased steadily since 1975. At least 20 timeshare companies still operate in the Coachella Valley and Inland Southern California, out of at least 126 statewide

Alan Reay, president of Costa Mesa-based hotel-brokerage firm Atlas Hospitality Group, said the timeshare industry is still going strong, thanks largely to famous hotel brand names.

"The people who are looking to buy these are going with companies they're familiar with: Hyatt, Marriott, Embassy Suites," Reay said.

Marriott, which built its largest timeshare, the 352-villa Shadow Ridge in Palm Desert, plans to eventually make it a 972-unit location.

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