Experts project demand will rise for timeshares

Despite a lackluster start to the year, Hawaii’s visitor industry is still on track to break an arrivals record in 2015, and the burgeoning timeshare industry will play a role in that expansion.

That was the opinion of a panel of tourism experts who spoke Monday at a Chamber of Commerce Hawaii luncheon titled Tourism 2.0 — New Wave of Timeshare Customers.

"Total visitor arrivals hit a record in 2014, and we’ll hit one in 2015," said Carl Bonham, executive director of UHERO.

According to the latest statistics from the Hawaii Tourism Authority, timeshare-only usage was up 3.3 percent in March to 49,769 visitors, and it rose 4.9 percent to 134,118 visitors for the first three months of 2015.

Visitors who planned to spend a portion of their vacation in a Hawaii timeshare increased 4.2 percent to 66,011 in March and climbed 4.7 percent to 178,754 for the first three months of 2015. That’s in contrast to HTA data for all of 2014, which reported timeshare-only usage fell 0.2 percent to 585,497 and partial-timeshare usage rose a scant 0.6 percent to 762,939.

Part of the reason for recent timeshare gains is that more people are coming to Hawaii and exploring options beyond traditional hotels. According to Bonham, real room rates on Oahu have risen 14 percent above their previous peak and 45 percent above the previous trough.

"We haven’t tested all the causes for visitors changing where they stay. Part of it is unavailability of hotel rooms as well as prices. But it’s also exploration from heavy repeat travelers," said Daniel Na­hoo­pii, HTA director of tourism research. "What we are seeing is that hotel usage hasn’t really dropped. It’s just that more people are coming, and they are staying in other accommodations like vacation rentals, condominiums and timeshares."

Customer demand for Hawaii timeshares also is growing, said Howard Nusbaum, president and CEO of the America Resort Development Association (ARDA), which represents the timeshare industry.

"I have good news for you: Timeshare is doing well and it’s doing well in Hawaii," Nusbaum said.

After years of lagging behind other destinations in terms of timeshare development, Nusbaum said Hawaii is coming into its own with 93 resorts, which make up 6 percent of the entire U.S. timeshare market.

"Hawaii is the most sought-after timeshare destination, with nearly $1 billion in sales," he said. "At 85.2 percent you’ve also got the highest timeshare occupancy in the U.S."

Altogether, Nusbaum said, Hawaii’s timeshare industry employs 4,000 people, generates wages in excess of $100 million and generates about $67 million in state and county tax revenues. As a result, Nusbaum said Hawaii’s timeshare plays an integral role in the $23.6 billion U.S. timeshare industry.

"I guarantee there’s someone buying a timeshare in Branson, Mo., right now because they see a picture on the wall of Hawaii," he said. "(Hawaii) is the dream vacation, the glue of the timeshare industry."

Blake Oshiro, the contracted executive director for ARDA Hawaii, said the state’s timeshare industry is expected to continue growing despite the pending passage of state House Bill 169, which, if signed by Gov. David Ige, would increase the transient occupancy tax by 2 percentage points over the next two years.

Oshiro said timeshare renters, who are using the properties like hotels, already pay transient accommodations taxes. He added that Hawaii is the only state where timeshare owners are charged a daily transient occupancy tax during their stay.

"Since timeshare owners already pay property taxes and general excise taxes, we were philosophically opposed to the increase, which would go from the current 7.25 percent of the unit’s fair market value to 8.25 percent next year to 9.25 percent in 2017," Oshiro said.

That said, Oshiro said the timeshare industry understands that the percentage-point hike mirrors the one imposed on the hotel industry during the height of the recession. Oshiro said the tax increases aren’t expected to dampen Hawaii timeshare sales or stays.

"It’s small, so most owners probably won’t even notice the increase," he said.