Who needs a hotel?

Whether the trend toward timeshare sales and condo-hotel conversions represents a blessing or a curse depends upon whom you ask.

Defenders of the increase in tourists buying a piece of paradise rather than renting it say that timeshare units, for example, enjoy a higher occupancy rate ensuring more visitors even during down economic times.

Critics — and labor leader Eric Gill may be the most outspoken — say that hotel owners are relying increasingly on a real-estate "flip" for a return on investment, and that all this buying and selling will lead to thinner margins and worsening prospects for the workforce.

"We’re talking fewer jobs here, many fewer jobs," said Gill, financial secretary-treasurer of UNITE HERE! Local 5, which is the union representing hotel workers. "Few timeshares have a food-and-beverage component; they are limited-service by definition.

"If I’m a housekeeper and I work there, I may get two days a week work," he added. "This creates very little employment while putting a strain on our community infrastructure."

Local 5, representing 10,000 workers in the hospitality, health care and food-service industries, recently went to court, as if to punctuate that argument. The union has filed suit against Turtle Bay Resort over its expansion plan, asserting that the proposed condos and timeshares won’t create as many jobs as full-service hotels.

Gill’s union staffers have produced a study on the issue, titled "The Goose That Laid the Golden Time Bombs: How Hawaii’s Changed Hotel Industry Threatens our Futures."

In addition to noting the national trend lines, the survey concluded the non-supervisory workforce at unionized hotels fell by an average of 13 percent between December. Employment dropped each year between December 2005 and January 2012, according to the study, even though there were only two years of industry economic decline during the recession.

Gill said the union research underscores the role that private equity investments in hotels have played in the changing product mix. Domination by hotels had given way, by 2011, to a mix in which "condotels," timeshares and "individual vacation units" such as vacation rentals represented 42.8 percent of the total lodging inventory; according to the study; that’s up from a 26.3 percent share in 2000.

The issue has been all over the news lately. Aqua Hospitality, hired to manage the bankrupt Naniloa Volcanoes Hotel under new ownership, has itself been sold, along with Aqua Hotels and Resorts, to Interval Leisure Group, a timeshare exchange company.

Kings Village Shopping Center in Waikiki soon will become one of the latest sites redeveloped for condotel use.

Another headline was from Kauai, where the County Council gave an investment group more time to rehab the iconic Coco Palms. Councilman Gary Hooser dissented, because he sought assurances that timeshare conversions wouldn’t be allowed. The developer said it’s not planned, but wants the door left open in case some future disaster compels such measures to keep the operation afloat.

The reason: People who buy timeshares are more committed to coming to Hawaii for their vacation because they’ve already paid, whereas economic uncertainty is more likely to dissuade a hotel room-renter from spending the money.

That’s the conclusion of various reports, including one presented last year at the Waikiki 2020 conference by the American Resort Development Association. Hotels statewide had an occupancy rate of 73.1 percent, compared with timeshares, which enjoyed an 87 percent rate.

The conference was sponsored by the Waikiki Improvement Association, whose president, Rick Egged, asserted that the new lodging options are on balance good additions because they have financed needed upgrades.

"The fact is, we need new and renovated product, because it’s difficult spending to renovate, these new products tend to give us a much more attractive inventory that adds to our appeal," Egged said.

Still, exactly where this trend is leading is a murky issue, said Juanita Liu, a faculty member with the University of Hawaii Travel Industry Management School. There’s little research on the broad impact, everything from tax repercussions to the effects on the Hawaii brand, she said.

For example, she recalled staying in one Astin property where rooms were rented in three management systems: online, by an individual owner and as a conventional hotel room. Sometimes the hotel staff are overworked, filling requests of timeshare guests who still have the expectation of service, Liu said.

As far as tax policy goes, there’s little agreement on that score, either. Gill said he believes there’s a lower tax burden on timeshares and especially condotels, adding that the correct move for government would be to remove the incentive for hotel conversions so that more, higher-paying jobs can be retained.

Countering that position is Lowell Kalapa, executive director of the Tax Foundation of Hawaii. The foundation has submitted testimony against proposed tax reforms designed to capture more revenue from these investment models.

Most recently it opposed the Honolulu City Council’s Bill 43, which originated as a proposal of Mayor Kirk Caldwell. The bill would have created a separate property-tax category for timeshare units so they would be taxed at a higher rate. Currently the hotel-room tax can be charged on timeshare units, but only if they are rented to someone other than an owner.

Kalapa noted that Kauai and Maui have implemented a similar approach. He argued that such strategies shifts too much of the tax burden for basic government services onto visitors.

Bill 43 has been held in the Council’s budget committee, which is chaired by Ann Kobayashi, who said it is likely to resurface in January or February.

"The mayor is going to submit his budget in March," Kobayashi said. "We’re looking at all kinds of ways to raise revenue."

Kalapa will probably restate his position then.

"I would probably oppose it on the basis of the accountability," he said. "You now begin to shift the accountability, to understand the cost of running government, from the residents to the visitors. And that’s very dangerous. It just opens the door for county government to grow without the accountability to resident taxpayers."

Gill worries that the conversion trend is going to produce a much-diminished resort district for Hawaii. There’s insufficient staffing to maintain the facilities adequately, he said. In addition to the impact on the employees’ pay packets, Gill said, reduced services yield a far less dynamic atmosphere than what’s seen at a full-scale resort.

The same thing will happen to Waikiki as he has observed in Miami, which already has accelerated its rate of conversions: "It was an old folks’ home, that whole area that was a vibrant resort," he said.

"Why don’t we make a long-term investment?" Gill asked rhetorically. "Why don’t we stabilize the ownership of our flagship hotels and take them off the market? That’s our message to the Legislature: ‘Guys, we’re heading in the wrong direction.’"

For his part, Egged said he believes the smarter course for the industry is to adjust to the new financial reality, one that enables improvement to an aging inventory. He added that he’s aware of the union’s position on timeshares and condotels.

"Nevertheless, they are a positive from an overall economic standpoint," he said. "They still do provide jobs — less jobs than hotels, but jobs nonetheless."