Time shares grow in popularity

Wednesday, May 5, 2004 | 11:12 a.m.

With no less than four major projects under development and more expected this year, the booming time share industry in Las Vegas is boosting prospects not only for time share developers but vendors that do business with them.

Two of the biggest secondary beneficiaries -- Miami-based Interval International and RCI of Parsippany, N.J. -- work with developers to help time share customers exchange their ownership interests with time share owners in other locations.

Both companies have offices in Las Vegas and were among the hundreds of companies in town this week to tout their services at the time share industry's largest annual meeting. The convention, sponsored by the American Resort Development Association, runs through Thursday.

More customers than ever -- around 50 percent last year -- are exchanging their time share interests with others at least once a year and many are choosing Las Vegas as a top destination, said Christopher Jones, Interval International's Las Vegas-based western division vice president.

"Las Vegas is more requested than Hawaii," the traditional time share hotspot, he said.

Interval has about 1.6 million members and contracts with about 2,000 resorts. Clients include Consolidated Resorts, which is building at least 580 units along Las Vegas Boulevard South and Marriott International, which is building 840 units near Polo Towers in a joint venture with Polo Towers owner Diamond Resorts International.

Las Vegas "is definitely bringing in significant business," said Doreen Bechard, vice president of RCI's western region. "It's growing and emerging and all the players are wanting to be in this market. We're getting all the big name companies."

The company is forecasting about half a billion dollars in new time share sales this year in Las Vegas.

RCI has about 3.1 million members and is affiliated with about 3,700 resorts. Clients include Fairfield Communities and Hilton Grand Vacations. Fairfield recently announced plans to build a third tower in its Fairfield Grand Desert Resort on Harmon Avenue near the Strip. Hilton Grand Vacations, a branch of Hilton Hotels Corp., also recently said it would begin development of a second major tower at its third and newest Las Vegas development at the north end of the Strip near Sahara Avenue.

In a study released Monday, the American Resort Development Association said the time share industry contributed an estimated $1.4 billion to Nevada's economy in 2002. That includes $480 million in payroll and related income, $197 million in tax revenue and $420 million in spending by tourists -- an estimate based on customers taking about 180,000 Nevada time share vacations and spending an average of $2,340 per trip that year. The study, conducted for the trade group by PricewaterhouseCoopers, marks the organization's most comprehensive study on time share economics.

At the end of 2002, Nevada had only about 3 percent of the estimated 1,590 time share resorts and 132,000 units nationwide, the study found. But Nevada time share purchases that year totaled about $420 million, or 8 percent of the $5.5 billion in U.S. time share sales.

Both Interval and RCI, like the better-known developers they represent, say the time share industry has matured and outgrown its perception as a hard sell fraught with hidden fees and other problems. The entry of major brands, upscale amenities and a high level of customer service have redefined the market, they say.

A survey released by Interval Tuesday shows that the company's time share consumers have an average household income of $114,200 -- nearly double that of typical U.S. households. About 45 percent of members reported professional or managerial occupations and nearly all own their primary residence. About 90 percent of Interval members said they were "satisfied" with their time share purchase and 62 percent said they were "very" or "extremely satisfied" with their purchase.

Many properties are now full-service resorts offering suites with kitchens, living rooms, jacuzzi tubs, maid services, a concierge and other marks of discriminating tastes, Jones said.

"The cost of entry into the market is such that you've got to be a pretty well capitalized organization to get a project off the ground," he said.

"You don't see the practices in this industry that you used to. We've had 20 years of regulation in the industry in just about every state with (a significant number of) time shares and there have been a lot of protections built in for the consumer."

Regulators attending the conference agreed.

Updated regulations have helped clean up the industry in the past five years to the extent that problems witnessed 25 years ago aren't visible today, said Randy Renfrow, time share program manager for the state of Washington's Department of Licensing Business and Professions division.

Consumer complaints have also recently "plummeted" in part because a times hare vendor that was the source of many of the complaints went out of business, Renfrow said. He declined to name the company.

"If you don't (conduct business properly) it will eventually come back to bite you," he told a room of time share sales agents and other service companies.

Ken Kitts, an investigator for the South Carolina Real Estate Commission, also said consumer complaints in his state are down this year and disclosure forms for consumers have been improved.

But he said customers still remain confused about some aspects of time share sales, such as the "points" system used by some companies to exchange units.

"They come to me to get an explanation," Kitts said. "You need to explain the product to buyers" before the sale is consummated.

Complaints haven't dried up altogether, regulators say.

Michael Garvin, an attorney for the Illinois Office of Banks and Real Estate, said his state is lodging several complaints over companies offering to help time share owners resell their units. In some cases, consumers have given credit card numbers over the phone to companies that disappear with the information. Regulators often have limited reach when it comes to such cases, he said.

Complaints are generally settled informally and companies are usually cooperative, Garvin said. Since the state adopted time share regulations in 1987 it has only issued two disciplinary orders against time share entities to enforce those rules, he said.

"We don't have the type of real serious complaints to (justify) prosecution," he said. "We act as a facilitator between consumers and developers."