Timeshares enjoying healthy boom

March 08, 2002 - Although Las Vegas has 120,000-plus hotel rooms, its timeshare inventory has lagged, prompting a recent rush of new building projects.

At present, there are $600 million worth of timeshare towers going-up around town.

"From what we're seeing, timeshares are becoming increasingly profitable for developers and owners," said Brian Gordon, principal of Applied Analysis, a Las Vegas-based real estate research firm. "Over the past five years, timeshares have experienced a 17 percent growth rate."

With $3 billion in annual sales nationwide, timeshares are the fastest growing segment of the hospitality industry today. The benefits include deluxe accommodations, which run from double to quadruple the size of a hotel room, and the ability to swap, share or transfer a vacation. Locally, visitors can enjoy resort-style amenities and the Strip without having to stay in a casino.

"Las Vegas is playing catch-up," said Robert C. Wengle, chief executive officer for Diamond Resorts International. "Our growth has been fueled purely by customer demand."

Diamond Resorts is currently building the $240 million "Chateau," a four-tower 850-villa development, across from the Aladdin. The new 30-story towers comes just 18 months after the firm finished a $45 million, 190-unit expansion to its Polo Towers.

"Business has been very good," Wengle said. "We feel like we're engrained in the market ... and (it) can handle what we are going to do."

Diamond, which also owns the Jockey Club and Carriage House, will have 1,807 timeshare units with the completion of the Chateau. However, since their suites run from 872 to 23,080 square feet, that number is deceptive.

"We have just grown, this industry was in its infancy when we bought Jockey Club in the late 1970s," said Wengle. "From an industry perspective, Las Vegas is the top destination area."

Apparently others feel the same way.

Resort Magic, a division of USA Investment Partners, is building a $100 million, 426-unit timeshare tower across the street from the Stardust hotel-casino. Dubbed the Royal hotel, the 40-story tower is expected to break ground in October and finish by early 2004. In addition, the company is converting the existing 236-room hotel they picked-up last year into timeshares as well.

"Las Vegas has proven to be an ideal market for vacation-ownership products," said Tom Hantges, chief executive officer of USA Investment Partners. "Our commitment to develop an additional tower to the Royal is a direct response to the growing customer demand for our accommodations."

Similar projects include a $120 million-, 917-unit timeshare called the "Cancun Resort," being developed by Laguna Hills, Calif.-based Monarch Resorts Inc., at Blue Diamond Road and Las Vegas Boulevard, and the $115 million-, 415-unit South Beach resort at Tropicana Avenue and Industrial Road, being built by Marvin Lipschultz.

Also, Hilton Hotels Corp. is building a $111 million, 33-story timeshare complex across from the Sahara hotel-casino. Work on the 350-unit project halted after the 9-11 attacks, but the development could restart later this year.

And Biloxi, Miss.-based Isle of Capri Casinos Inc., who now owns the 792-room Lady Luck hotel-casino, wants to convert its west hotel tower into a timeshare complex.

"One of the reasons for increased timeshares sales is that it forces people on a hectic schedule to make time for a vacation," Gordon said. "Once (an owner) has invested his money, he'll make certain to use the suite."

According to Applied Analysis' statistics, the average timeshare owner is 54 years old, earns $75,000 or more a year, and is married.

"The market is still expanding," said Gordon. "The existing properties in town are maintaining their position and more developers are entering (this) market. ... Timeshares are a lucrative proposition."

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Article Copyright ©: T. Illia, LV Business Press