The fastest growing segment of Hawaii real estate is timeshare.
The timeshare business began in Europe in the mid-1960s and spread to the United States. Properties that combine vacation ownership with hotels, popular urban vacation ownership resorts in major cities, adventure resorts, and gaming resorts are among the emerging timeshare trends. In the past, timeshare has had a negative reputation due to the marketing methods and high-pressure sales tactics.
In 1975, there were 45 timeshare projects with 10,000 members in the United States. Currently, it is estimated that there are nearly 5,425 resorts in 95countries with more than five million owners of timeshare units. Timeshare sales revenue exceeded $9.4 billion. Highly respected hotel chains such as Marriott, Hilton, Disney, Holiday Inn, Embassy, etc., have joined the growing vacation ownership program.
Disney Hotels just announced plans to build a $800 million hotel in Ko Olina and will be selling timeshare units.
The basic concept of timeshare is to sell a fractional interest of a condominium or hotel unit in weekly intervals. Consumers buy them because they think that in the long run, it will cost less to own a timeshare unit at a vacation property than to pay for hotel rooms. Many of the resorts are in prime locations where it would be too expensive for one person to buy an apartment by himself. In Hawaii, an ocean front hotel room used to cost $20 a night, currently rents at $300+ per night. If the room rates continue to increase, timeshare units appear to be a good hedge against inflationary room rates.
The timeshare units are attractive to travelers because they feature large one and two and three bedroom suites with full kitchens and many of them come with washer/dryer in the units. Unlike a small hotel room, the timeshare units are specifically built for large spacious living.
There are two basic kinds of timeshares. The ownership units gave the consumer a deed and title to the fractional interest. The owners could sell or will their units. The right to use units gave the consumer the right to use the units for a fixed period of time or for life and can be transferred to their heirs for a nominal transfer fee.
There are fixed period sales where the consumer buys a specific time period each year and there are floating period sales where the consumer buys a "unit" in an unspecified time period and reservations are based on first come, first served basis. Hawaii units are in high demand by others who want to trade into Hawaii. Club memberships allow you to buy the rights to the timeshare units wherever the club owns timeshare units and you do not get title to a specific unit in a specific project and have the right to use any of the timeshare units that are owned by the club throughout the world.
A new major concept is the "points" system where the consumers are given pre-determined points for their units. Some of the hotels have made arrangements with other travel providers and allow the consumer to trade their points for plane tickets, cruises, car rentals, recreation vehicles, backpacking trips, golf lessons at a resort, etc.
Most timeshare projects have registered as a condominium under the HRS 514A and must register the timeshare project under the laws of HRS 514E.
The sales agent is a licensed person who sells timeshare units. The sales agent must have a real estate license. .
There are currently about 90 timeshare projects registered to do business in Hawaii and more projects are expected.
The profile of a potential buyer is:
- Older people over 50 years
- Income of over $60,000 per year
- Like to travel or would like to travel
- Older single people are good candidates
- Have children or family in other parts of the world
- College education
Is time share a good investment in real estate? The timeshare law clearly states that it is against the law to say that timeshare is an investment in real estate. It is an investment in travel and must be marketed that way. There are severe penalties for violating the timeshare laws in Hawaii.
Many of the major timeshare companies own a limited number of properties in their chain of resort destinations. For example, Marriott owns 31 timeshare projects built specifically for timeshare ownership. If a timeshare owner wanted to vacation at a location that did not have a Marriott project, there is an opportunity for the owner to exchange with other timeshare resorts all over the world through timeshare exchange companies. Resort Condominiums International (RCI) has over 4670 affiliated resorts that the traveler can exchange with his timeshare unit. Interval International (II) has over 2,400 affiliated resorts to exchange. The two major exchange companies charge an annual membership fee and an exchange fee for every exchange that they book for the timeshare owner. The timeshare owner will never run out of places to visit and the resorts are ranked according to amenities and quality.
Prices for timeshare units can range from $2,900 (
Royal Aloha Vacation Club) for a one bedroom one week unit to over $100,000 for one, two and three bedroom units with major hotel chain timeshare resorts. There is an annual maintenance fee and they can range from $300 to $2,500 and more depending on the resort. There are several companies that resale timeshare units and the consumer can get a nice unit at a reduced price at most of the resorts. The resale market will always be around since there are millions of timeshare unit owners and some will want to sell their timeshare unit for different reasons.
Timeshare is not for everyone. Those that enjoy traveling will appreciate their timeshare ownership. Those that are pinching pennies when they travel can find cheaper accommodations through the Internet. For more information on the timeshare industry, please feel free to call me at 216 4999 or email me at
abelee@hawaii.rr.com.
Abe Lee Seminars, an affiliate of Abe Lee Realty is offering scholarships for the real estate school. For more information on the scholarship program, call Abe or email Abe.
