I had an interesting conversation the other day with Howard Nussbaum, president of the American Resort Developers Association, the association for timeshare companies. He was in town touting a recent report on the positive economic effects the time-share industry has on the local economy. Of course, as the chief lobbyist for the industry, he has an axe to grind, but he certainly made some interesting points about the value of timeshare in the Hawaii market.
First, he pointed out how the recession has highlighted timeshare as economic bolster for a tourism-based economy. “One of the – I don’t want to say ‘benefits of the downturn’, because I know there was no benefit – but the downturn did put a spotlight on the stability time share offers local resort communities.” And he noted that, because of the influence tourism has here – as much as 40 percent of the economy by some measures – Hawaii is as much a resort community as small ski-towns like Vail and Aspen. The importance of timeshare, Nussbaum said, was that it evened out demand even as the economy took a dive.” This, of course, is in stark contrast to the demand for hotel rooms.
“That’s because hotel occupancy is very susceptible to the valleys of the economy or to a geopolitical event or weather disaster,” Nussbaum said. “ Remember, after Iniki, after September 11, during this recession, how hotel occupancy dipped. I’m a former hotelier; I understand they’re the first ones to feel it. But timeshare, because of its pre-sold nature – the person already owns it – economic conditions don’t matter as much.” As a timeshare owner, he points out, you’ve already paid for the accommodations portion of your vacation, so you’re much less likely to let that go to waste.
“After 9/11, as soon as planes were flying again, timeshare people started coming back to Hawaii,” Nussbaum said. Similarly, according to Nussbaum, the recession, which sent statewide hotel occupancy down under 70 percent, barely made a dent in the timeshare market. “Our occupancy for 2009 is almost 91 percent.”
Those numbers have certainly gotten the attention of the hoteliers in Waikiki. As Nussbaum puts it, “Mixed use is the future, for many reasons.” Certainly, all the big chains have timeshare components in their plans, a fact that discomfits some of the unions, who believe the timeshare business will mean fewer employees (a belief Nussbaum vehemently disagrees with.) The effect, of course, is that it’s sometimes difficult to distinguish timeshare from the hotel business.
“People like bright lines,” Nussbaum says, “but it’s sometimes gray. Take Hilton Hawaiian Village, for example. They have 300 plus timeshare units, and a couple thousand hotel rooms. But if a big convention is in town and they don’t have hotel inventory, they’re going to rent those timeshare units if they’re available.” And it’s partly that flexibility that makes timeshare so attractive, both to the hotel industry, but also to the Hawaii economy.
“It’s not which is better, hotels or timeshare,” Nussbaum said. “They’re both different. They’re both part of the mix and they support each other.”