Counting on controversy

If you are building a time-share hotel and the suites have an interior door that allows them to be divided and rented to separate guests, do you count each suite as one hotel room or two?

For a handful of time-share developers in Hawaii, the answer has been one.

The result, according to critics, is that some developers are understating the number of time-share units they are adding to communities and the corresponding impact on traffic and stress on resources.

"It makes a big difference," said Dee Dee Letts, a Kaaawa resident and member of several community groups opposing an expansion of the Turtle Bay Resort on Oahu’s North Shore.

Turtle Bay is one example of a small but increasing number of Hawaii vacation properties that count the number of time-share units by how many are sold instead of how many could be used simultaneously.

Property owner Turtle Bay Resort LLC filed a supplemental environmental impact statement preparation notice recently with city and state regulatory agencies proposing to add 625 hotel units and 750 residential units to the 880-acre property.

But the number of new hotel units could actually be as high as 1,000, or 375 more than generally presented, according to details in the SEIS preparation notice.

The higher figure allows for development of hotel rooms as time-share units, which potentially could include some large units that could be split into additional smaller units for use.

The potential maximum development of 1,750 hotel and residential units under the SEIS is still less than a proposal for 2,345 units floated by the company in March or a maximum build-out plan of 3,500 units pushed by former property owner Oaktree Capital Management LLC in 2005.

Still, the difference could be significant in terms of traffic and other impacts, especially because time-share projects typically have higher occupancy than traditional hotel units.

"It would add to the amount of traffic and the number of guests on property," Letts said, adding that she regards the lower number of 1,375 hotel and residential units shared with community groups as disingenuous. "We have a problem with how they’re doing their numbers."

Lee Sichter, a consultant for Turtle Bay Resort preparing the SEIS, said assessments of impacts from the proposed development including traffic studies will be based on the highest potential density.

Time-share projects with units that can be divided into larger numbers of smaller units are not the norm in the industry in Hawaii.

But a handful of developers statewide have built time shares with what are called "lock-out units," or big units that have more than one entrance and an interior door that can be locked to divide the space for separate guests.

At Hilton Hawaiian Village, which is proposing to build two new time-share towers with a combined 562 units, none of the units will have lock-outs. "Our count will be our count," said Jerry Gibson, Hawaii vice president for Hilton.

Hilton also did not use lock-outs at previous time-share projects in Waikiki that include the Waikikian and Lagoon Tower.

But at Disney’s Aulani resort at Ko Olina Resort & Marina, rooms have been built with lock-outs, though Disney did not respond to requests for a count last week. Disney has previously said Aulani has 481 "two-bedroom equivalent" units.

Lock-outs also have boosted the number of units available for use at Marriott’s Ko Olina Beach Club time share, which has long been promoted as a 750-unit project.

Marriott opened an initial phase of the complex in 2003. Today construction is close to 60 percent complete and there are about 750 units already available for use, including 336 that can be divided in two.

Three other Marriott projects in Hawaii — two on Maui and one on Kauai — have up to twice as many units for use compared with the more commonly stated lower figure, according to a Hawaii Tourism Authority report.

Ed Kinney, vice president of corporate affairs for Marriott’s time-share division, said the company counts its units by what is sold to buyers. Lock-out units are not sold separately. Buyers then have the flexibility to use units with lock-outs in whole or part, as does Marriott, which can rent time-share units to hotel guests if not in use by owners.

Other properties with boosted inventories include Westin Princeville Ocean Resort Villas on Kauai and Hilton Kings’ Land on Hawaii island.

Out of 91 time-share properties in Hawaii, only seven have such enhanced inventories, according to the HTA report.

In most cases, with the exception of Hilton Kings’ Land, Hawaii timeshare project developers often publicly state unit counts excluding lock-outs.

For regulatory purposes such as zoning, the city Department of Planning and Permitting regards the number of units in a time-share project as the total number of occupiable units, which includes lock-outs, according to city spokeswoman Louise Kim McCoy.

Turtle Bay’s owners are unsure what will ultimately be built at the resort because the owners are a collection of lenders who repossessed the property from development firm Oaktree and may sell or partner with a developer or developers to execute the expansion plan.

The resort owners are giving themselves flexibility in the SEIS to accommodate the possibility that a time-share developer might want to include lockouts.

Two hotel sites are designated on either side of the existing 443-room Turtle Bay hotel in the SEIS preparation notice. One site is contemplated as a time share with 375 units, though it is possible the property could be a traditional hotel or hotel-condominium, the notice said. The other site is proposed for a 250-unit condominium-hotel, though a time share or traditional hotel are also possible.

The notice states that the total number of units on the hotel sites is planned at 625, but could be no more than 1,000 including lock-out suites.

2 WAYS TO COUNT TIME SHARES

The number of units increases when suites are used as two rooms.

Source: Hawaii Tourism Authority 2010 Visitor Plant Inventory