NATIONAL REPORT— To meet the consumer demand for vacation ownership, which has been steadily increasing by double-digits each year since the 1980’s, development firms are scrambling to enhance their portfolios with a broad assortment of destinations to offer owners. Although construction and land costs continue to climb, vacation ownership companies are still pursuing numerous opportunities for both new build and conversion projects in the U.S. and abroad. Starwood Vacation Ownership is one such company with a booming development pipeline. The company recently announced plans to add more than 1,600 villas with a total of more than 6,000 rooms to its portfolio. The projects, which will be in the U.S., Mexico and the Caribbean, will be a mix of new builds, conversions and expansions of existing resorts. “We’re in a very aggressive, high-growth mode,” said David Matheson, vp, corporate communications for Starwood Vacation Ownership. “The synergies vacation ownership offers, particularly as part of a mixed-used development, are really hitting on all cylinders.” Within the U.S., Starwood Vacation Ownership is developing a new resort in Palm Desert, CA under its Westin brand. Situated on 30 acres, construction on the Westin Desert Willow Villas will begin in early 2008 and sales are scheduled to start later this year. The Westin Kierland Villas in Scottsdale, AZ is nearing the end of an expansion project that added 54 additional units and the Sheraton Vistana Villages in Orlando will be gaining an additional 195 units. Additionally, the Sheraton Broadway Plantation in Myrtle Beach is nearing completion of 22 new units. Outside the U.S., construction on the Westin St. John Resort & Villas is underway with a planned 2007 opening. Also slated for completion that year is the Westin Aruba Resort & Spa. Starwood Vacation Ownership is also making its first foray into Latin America with the Westin Lagunamar Ocean Resort in Cancun, Mexico. Matheson noted the land for the property was previously occupied by a Sheraton. “We re-evaluated the property and felt it was better suited for vacation ownership. So we’re demolishing the hotel and replacing it with a timeshare,” he said. Hawaii is still a primary focus for the company. Expansion of the company’s Westin Ka’anapali Ocean Resort in Maui is taking place in two phases and the first Westin-branded timeshare in Kauai, the Westin Princeville Ocean Resort Villas, will open in early 2008. A Sheraton-branded timeshare in Kauai is also in the pre-development entitlement phase. “The Hawaiian market has not slowed down at all,” said Matheson. “We’ve been extremely successful with our first Maui property and the second phase is under construction with the third in development.” Also taking advantage of the robust consumer demand for timeshare properties in Hawaii is Wyndham Vacation Ownership. Instead of looking to purchase land to build a new vacation ownership resort, the company went a different route, acquiring privately held PAHIO Resorts, Inc., which has a portfolio of five resorts located in Kauai. According to Alan Litwack, senior vp, strategic development, the decision allowed the company to quickly and substantially enhance Wyndham Vacation Ownership’s foothold in Hawaii. “We saw the opportunity to increase our presence from six resorts [in Hawaii]to 12…an acquisition also allows us to get the product out quicker…The island is certainly a challenge from a development standpoint and this decision allowed us to get into the market in a much bigger way,” he explained, adding that in locations where new builds are difficult, acquisitions of existing resorts are a welcome alternative. “If it’s a place where our owners want to go, but land is scarce, we will find another way. We want to continue to have new and exciting locations to offer them.” Going forward, Wyndham Vacation Ownership is focusing on its presence in key, high-demand markets. Being a part of the newly-created Wyndham Worldwide will also provide the company with increased opportunities. “You’re going to see a lot more mixed-use developments created in conjunction with Wyndham Hotels,” said Litwack. “Being a subsidiary of Wyndham Worldwide has opened up a lot of new opportunities for us and our owners.” Marriott Vacation Club International (MVCI) has recently broadened its focus on an international scale by opening a regional office in Singapore, which is aimed at allowing the company to effectively target the Asian market. Ed Kinney, vp corporate affairs, brand awareness, explained this decision has been a long time in the making. “The new office in Asia is a very exciting venture,” he said. “We’ve had our property in Phuket, Thailand for a while and have used it to learn about our customer base [in Asia]and how to adapt the product to their culture, wants and needs…There’s a tremendous amount of potential in that market and we’re the first major [branded timeshare]company there, so we’re sort of pioneers.” Kinney noted that MVCI has already pinpointed areas for development of new product in Asia. The company is also pursuing development in the U.S. and Caribbean. “We’re going like gangbusters,” said Kinney, “In the Caribbean, demand is still absolutely going strong.” MVCI recently began sales for its new property in St. Kitts, closed on a property in Marco Island and will open Frenchman’s Cove, a new resort in St. Thomas this December. In addition, the company is catering to the rising demand for Hawaii by expanding its Maui Ocean Club. “We took two areas that were a parking garage and tennis courts and are adding more units,” he said. Independent timeshare companies are also adding to their portfolios, albeit usually on a smaller scale. One such company is Rogers, AK-based Escapes! Inc. In June, the company broke ground on a new $42 million waterfront resort in Orange Beach, AL. The 88-unit Escapes! to The Shores will be part of an existing resort and will be the company’s second timeshare property in Orange Beach. It is scheduled to open in late summer 2008. “We’re always building,” said Paul Tappano, COO, Escapes! Inc. He noted the company prefers new builds rather than conversion projects. “With rebuilds, it can be tough to get all of the necessary amenities in.” However, Tappano noted being part of a larger resort facilitated getting the new Orange Beach project off the ground. “We really couldn’t have done The Shores project if it wasn’t part of a mixed-use development. Land is so expensive, that was the one driving factor that really made the project work,” he said. When asked about competition with the larger, branded timeshare companies, Tappano reported Escapes! chooses to pursue markets that are not as highly developed. “For now, we don’t try to compete with the large developers. We’ve made the decision not to focus on markets like Orlando and Las Vegas. We are a small company so its very tough to compete with the marketing power and owner bases of the large companies so we choose to go to areas where we do not have to compete with the brands.” Industry-wide, both in dependent and branded timeshare companies are confident the best years for vacation ownership are still ahead. “The industry is maturing in terms of improved flexibility, product and service,” said Matheson. “I think we’ve only scratched the surface of the demand.”
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