Time-share industry bullish on Hawaii

Dave and Jeannine Funk live in Reno, Nev., but for part of every year they feel like island residents.

The Funks, who bought a time share at the Hilton Hawaiian Village Waikiki Beach Resort in 2010 while the market was in recovery, are among a growing number of visitors who want to own a percentage of interest in a hotel unit, condo-hotel, bed-and-breakfast or vacation home so they can visit for a specific period of time on a recurring basis.

"We come at least once a year to Hawaii, sometimes twice," said Jeannine Funk. "We’d been coming to Hawaii for 40 years, so buying a time share just made sense."

Buyers like the Funks have kept Hawaii’s time-share industry growing despite the severe visitor industry downturn from 2007 to 2009, according to Howard Nusbaum, CEO of the American Resort Development Association, who will present an overview of the time-share industry today at the Waikiki 20/20 planning conference at the Hawai‘i Convention Center.

"Hawaii continues to be an aspirational destination," Nusbaum said. "Two kinds of people buy in Hawaii: those who love Hawaii and those who are time-share devotees who realize it’s a powerful exchange. Having Hawaii is like having Boardwalk and Park Place in a Monopoly game."

The statewide occupancy rate for time-share units averaged 87 percent in 2011 as compared with 78.9 percent at time shares throughout the nation, Nusbaum said. The good news in 2012 is that time share, especially in Hawaii, is expected to grow, he said.

More positive economic fundamentals, the robust growth of the international time-share market and higher-priced hotel rooms bode well for the isle industry, Nusbaum said.

"There’s an emerging middle class in Asia, and geographically Hawaii is sitting very pretty," he said.

According to a 2010 association global study, $4 billion worth of time shares have been sold outside of North America, he said.

"We’ve sold $10 billion in the U.S., Canada and Mexico; however, more buyers are coming from emerging markets like Korea, China and India," Nusbaum said. "When they trade their weeks closer to home for time in Hawaii, they’ll visit, and they’ll likely come back as buyers."

There’s no doubt that time shares are growing again in Hawaii, said Joseph Toy, president and CEO of Hospitality Advisors LLC. As many as 261 time-share units were added between 2010 and 2011, Toy said. Last year there were 10,201 time-share units across the isles, he said.

"There is a lot of pent-up demand for travel," Toy said. "Now that the economics seem to be strengthening, I’m sure that there will be an uptick in time-share development and buying."

Altogether, about 1,436 time-share units are scheduled to be built in Hawaii between 2011 and the end of next year, Nusbaum said. There also is the potential for another 2,336 units, he said.

Jerry Gibson, area vice president of Hilton Hawaii and managing director of Hilton Hawaiian Village, said the company is excited about expanding its time-share offerings.

"Time-share occupancies are up and sales are high," Gibson said. "We’ve got more owners in our time shares than renters. This market is holding its own and growing for sure."

Renovation of the former Ohana Islander Waikiki into the Hoku­lani, a 143-unit time share, is slated to be complete in 2013, he said. Hilton’s new time share, the 98-unit King’s Land, should be completed this year on Hawaii island, Gibson said.

Construction on a third 418-unit time-share tower at Hilton Hawaiian Village is anticipated to begin at the end of 2013, he added. When completed, that time share would bring the Hilton Hawaiian Village time-share count to roughly 1,074, Gibson said

Keith Vieira, senior vice president and director of operations for Starwood Hotels & Resorts in Hawaii and French Polynesia, said the chain needs more time-share inventory to sell in Hawaii.

"Our Westin Ocean Kaanapali Resort Villas and Westin Princeville Ocean Resort Villas have had a good sales pace," Vieira said. "We are excited with the sales results and with the guest experience comments. We hope to begin construction of another phase at the Ocean Kaanapali Resort soon."

Starwood’s time shares bolster occupancy and spending, he said.

"They come because they have prepaid for the vacation," Vieira said. "Also, they pay their maintenance fees at the beginning of the year, so they are our highest-spending guests. These are the guests that are going sailing, hiking and kayaking. They are spending a lot on the ground in Hawaii."