FL MORRIS / FMORRIS@STARBULLETIN.COM
Felicity Johnston from Australia listens to a time-share pitch from David Ashmore along Lewers Street in Waikiki. The industry generated $81.8 million in tax revenue for the state last year, a new survey says.
Hawaii's fast-growing time-share
sector attracts millions in spending
Jim Milberg and his family enjoyed the few weeks they spent each year at their Pahio Resorts time-share in Princeville, Kauai, so much, they now extend their Hawaii visits by renting accommodations for the winter.
"We use our time-share every year and we've become semi-locals," said the Boulder, Colo. resident. "We have a Kauai post office box, a bank account and we belong to the library there."
Visitors like the Milbergs are a growing portion of Hawaii's visitor industry, according to a survey released yesterday by the American Resort Development Association, a Washington, D.C.-based trade association representing the time-share industry. The industry's growth is leading expansion in Hawaii tourism, and time-share is expected to continue growing, said Mitch Imanaka, the association's Hawaii chairman.
While the number of time-shares in Hawaii has soared, the industry is still relatively small -- it represents roughly 8 percent of the state's total visitor lodging. The industry maintains high levels of visitor occupancy and can bring renewed investment to run-down hotels. It also spends its own money on marketing the destination, but not everyone in the state's visitor industry is sold on the concept.
Some worry time-shares will reduce the number of available hotel rooms and cut into the number of jobs in the hospitality industry. Others say time-share visitors hurt state revenues because owners pay fewer impact fees and taxes than hoteliers and tend to spend less.
"We're very involved with time-share development. It's a huge part of our tourism industry and there are a lot of myths and legends floating around that we need to be able to identify," said Maui Mayor Alan Arakawa, who has his own time-share task force and flew to Oahu to hear the survey results.
Results of the survey, which was prepared by accounting firm KPMG LLP from mailings to time-share visitors, show that the industry brings positive economic impacts, said Howard Nusbaum, president and chief executive officer of the association.
Last year, Hawaii's time-shares attracted around 524,000 visitors to the Islands -- 12 percent more than those who came for meetings, conventions and incentive trips. The survey notes that time-share visitors spend about 44 percent more per visit than other Hawaii visitors from the mainland, generating about $627 million in direct spending and an estimated $1.1 billion in trickle-down spending.
The survey estimates time-shares garnered $81.8 million in tax revenue for the state last year and generated $18.1 million in county taxes. The time-share industry also provided about 4,080 full-time jobs and paid workers an estimated $105.6 million in wages in 2003. And time-share projects created an estimated 620 full-time construction jobs last year.
While state tourism officials are intrigued by the data, the calculations seem high, said Marsha Wienert, Gov. Linda Lingle's tourism liaison, and they will have to get a better look at the methodology before commenting.
What's not in doubt is that time-share has become a significant market for Hawaii, Wienert said.
"It's the most resilient market," she said, adding that time-share owners are far less likely to abort their travel plans than other tourists, who have stayed home due to geopolitical issues, SARS and terrorism fears.
The transformation of the tourist industry from visitors as transients to visitors as stakeholders is part of the larger evolution of Hawaii as a destination, said Paul Brewbaker, senior vice president and chief economist with Bank of Hawaii.
"The baby boomers are in their 50s and their lifestyle is different from when they were in their 20s and 30s and coming to Hawaii in the 1970s for spring break," Brewbaker said.
Consumer demand has pumped up Hawaii's time-share inventory, Nusbaum said. Since 1999, the number of time-share units has grown 24 percent to 5,734 units across 74 resorts. More than 900 of the new units were added in 2000 and 2001. New time-share sales have also jumped more than 23 percent in the past five years, to $538.9 million from $234.5 million, according to the survey.
"We foresee that time-sharing will continue to be important in the mix of options available to Hawaii visitors and will make tremendous contributions to our economy over the next decade," Imanaka said
The numbers add up for Hawaii developers as seen in the pace of hotel-to-time-share or partial time-share conversions throughout the islands. It's not financially feasible for most developers to build more hotel rooms, said David Carey, president and chief financial officer for Outrigger Enterprises Inc.
At one time, Outrigger had planned to build new hotel rooms as part of its $800 million Waikiki Beach Walk Project, which is slated to begin construction next year, but economic conditions caused the company to shelve the project for nearly a decade. The company's new vision includes tearing down six hotels and replacing them with time-shares and condos.
Marriott's Maui Ocean Club is demolishing existing meeting space to make room for more time-shares, said Robert Calhoun, Marriott's regional vice president of sales and marketing for Hawaii/Asia.
"It speaks to our strategic decisions of how to remain a profitable and visionary company," Calhoun said.
Entering the time-share market of the 1980s -- which at the time had a dubious reputation at best -- was a risky undertaking for Marriott; however it was a gamble that paid off, Calhoun said.
Marriott has achieved the nation's highest annual time-share sales, which topped out at $1.3 billion in 2003, he said.
"We literally became the overnight leader of the industry and I believe our entry paved the way for other branded corporations to follow," he said.
According to a survey released yesterday by the American Resort Development Association, time-share visitors spend about 44 percent more per visit than other Hawaii visitors from the mainland.
Time-share visitors spent:
$4,319 per trip
Other domestic visitors spent:
$1,207 on food and beverage
$688 on entertainment
$743 on transportation
$507 on shopping
$1,681 on lodging
$3,007 per trip
Source: American Resort Development Association
$679 on food and beverage
$199 on entertainment
$404 on transportation
$453 on shopping
$1,724 on lodging