WASHINGTON, DC—It’s no secret that the hospitality industry is a major contributor to economic growth in this country, but a recent study found that, in 2013, the U.S. timeshare industry contributed an estimated $68.7 billion in consumer and business spending to the national economy.
Conducted by Ernst & Young for the American Resort Development Association (ARDA), the study also shows that the timeshare industry offers some 473,000 full- and part-time jobs with $23.6 billion in salaries and wages.
Howard Nusbaum, president and CEO of ARDA, noted that studies like this are important, particularly when approaching a community that typically hasn’t had a lot of timeshare activity and doesn’t know a lot about the benefits. “It’s a way for us to introduce ourselves to communities in terms of all of the positive impact we offer,” he said. “When we are going into a community that doesn’t necessarily understand timeshare, we’re able to show that we’re very hotel friendly, that mixed use is the answer, and this helps even out the peaks and valleys of the economy in terms of a tourist destination.”
In addition, it helps communities understand the economic impact of tax revenues. Nusbaum said that, sometimes, local authorities don’t understand whether timeshare properties should pay transient occupancy taxes like the bed tax. “Well, the answer is no, because we’re not transient—except when we rent, and we, of course, pay those taxes—but the good news is we do generate a lot of tax revenue for a location,” he said. “We do bring in jobs and we help the economy.” The study found that the timeshare industry contributes significantly more federal, state and local tax revenue per employee than the average industry, totaling $8.5 billion in 2013.
Nusbaum noted that one of the key aspects of the study is that the economic impact goes beyond resort operations jobs, including the economic impact of sales and marketing offices, corporate operations, the construction of new resorts and the renovation of existing resorts. “We have more than resort operations jobs,” he said. “We employ nearly a half-million people and a lot of those jobs are accounting, regulatory, sales and marketing. Not that there’s anything wrong with resort ops jobs—that’s where I come from—but we have more jobs than just traditional resort operations.” For instance, of the roughly 473,000 timeshare jobs, only 171,633 are made up of jobs at resorts.
Expenditures of vacationers are also highly important, noted Nusbaum. In 2013, spend by owners and guests was estimated at $10 billion: $2.1 billion was spent at timeshare resorts, while $7.9 billion was spent in the communities the timeshare resorts are located.
ARDA has been doing this study for 15 years, and Nusbaum noted that, compared to recent studies, timeshare is continuing to grow due to its prepaid nature. This has also helped contribute to that $7.9 billion spent in local communities. “I like to call it teenage rich: When you’re not facing a $4,000 American Express bill at the end of your week’s lodging because your timeshare is prepaid, you feel like you’ve got more money in your pocket and you have a tendency to go out and spend that,” he said. “Unlike our brethren in the hotel industry—where so much of the spend is on property—a lot of our spend is off property.” According to the study, the average traveling party spends $1,967 per vacation. Based on an average travel party size of 3.45 people, the average total spending per person is $570; $448 of that $570 represents off-site spending.
“I was talking to the folks at [Ali’i Kula] Lavender Farm, a really cool farm in Maui,” he continued. “They told us their favorite customers are the timeshare people because they come back every year.” In addition, because timeshare guests tend to cook in their units, they tend to buy products “where maybe a transient tourist who stays in a hotel for three to four days wouldn’t want to go to an attraction where you’re buying produce and flowers and things like that.”
Nusbaum added, “We have a tendency to have one foot in tourism and another foot in that wholly owned, residential vacation home, where people want bragging rights. They want to buy a piece of art and bring it back home. It’s feeling like you’re getting a little piece of the rock.”
And that, of course, is good for the locals, said Nusbaum, as is the relative consistency of timeshare. “Not that I like to relish in tragedies, but after 9/11 or after a major hurricane, our economic impact was really seen,” he said. “Hotel cancellations have a short window. In October 2001, hotel occupancy in Orlando was hovering around 50%. Our occupancy was well over 80%. In Hawaii, in 2009, right after the height of the big recession, hotel occupancies dropped to the very low 60s. Timeshare was 91%. The prepaid nature of it guarantees occupancy, which means that housekeeper gets 40 hours a week, that local purveyor that depends on hospitality still gets their business. Timeshare is a great anchor to even out those peaks and valleys in an economy. During a downturn, that becomes very obvious because the only people coming to that destination are timeshare people.”
Nusbaum noted that studies like this one aren’t meant to lessen the importance of the hotel model. “Timeshare is not a threat to hotels,” he said. “We’re owned by hotel companies. Mixed use is the answer and I think that’s the future. Mixed use helps the hotels, but it also helps timeshare. You often meet a destination via a hotel product and you’re often solicited for a timeshare tour when you’re at a hotel. It’s very symbiotic.”