The hotel industry is increasingly looking to timeshare as a way to fill rooms. Major hotel brands like Marriott, Hilton, Disney, and Ramada have all entered the timeshare market, seeing it as a viable option. Marriott in particular has found great success with its timeshare properties, with over 40,000 owners and $100 million in annual sales. Hilton also recently formed a new timeshare company through a partnership with an existing timeshare operator, gaining over 20,000 existing owners. The success of these major brands in timeshare demonstrates that it can be an effective occupancy option for hotels.

1. The Hotel Industry - Timeshare

2. TACKLES TIMESHARING

3. With lower occupancy rates, a sagging economy, and the
changing demographics of travelers, hotel industry
officials are constantly searching for ways to fill rooms.
One hot topic is timesharing.

4. Long considered the bad boy of the hospitality business,
timesharing is coming of age in both size and stature.
The entrance of companies like Disney, Marriott, and
Hilton has served notice that timesharing is a viable
occupancy option for the hotel industry.

5. THE BASICS

6. Timesharing's image of past decades is quickly changing.
Many vacationers now view it as a viable and
economical option for future vacations.

7. The timeshare market is exploding. In the past two
years, almost 500,000 households have purchased a
total of more than 700,000 timeshare intervals. That
means there are more than 3 million owners at more
than 3,000 resorts worldwide. Contrary to popular
belief, a recent survey showed that most of these
owners are happy with their purchase.

8. "It is clear that timesharing is gaining in popularity, not
only here in the United States, but also across Europe,
Mexico, and in South America," says Tom Franks,
president of the American Resort and Residential
Development Association, the timeshare industry body.
"We expect the industry to double in the next 10 years
and the hotel industry will definitely be involved in a big
way."

9. Timesharing is the most prevalent form of vacation
ownership. Consumers typically buy one or more weeks
at a specific resort and can return to that resort every
year or exchange it for a week at another resort. Prices
currently average around $9,000, with annual
maintenance fees of around $300.

10. Vacation timesharing generally takes one of two forms:
"Fee" timesharing gives the purchaser permanent rights-
-in the form of a deed--to the property. About 85% of
timeshare resorts sell under fee-ownership agreements.
"Right-to-use" timesharing grants the purchaser the
rights to the use of the property for an established
period of time, such as 30 years. Under this type of
timesharing, the purchaser does not receive a deed.

11. Rather than return to their home resort every year,
many owners opt to exchange to one of thousands of
other timeshare properties worldwide. For a small fee,
companies like Resorts Condominiums International or
Interval International perform these exchange services
for member resorts and owners. Many owners say this
exchange privilege was a key reason for buying. Many
hotel chains in the timeshare industry form their own
internal exchange system to complement the exchange
company services.

12. Hotel companies have found that the basics of
timesharing are an ideal fit for filling rooms. They have
accomplished this by using existing facilities and
services, as well as developing new properties and
support structures. Their success stories tell the tale of
why and how the hotel industry is tackling timesharing.

13. THE MARRIOTT STORY

14. While timesharing has been in the United States for just
twenty years, Marriott has been around for more than
six decades. In 1984, however, it entered the
timesharing business and has turned the move into a
very successful venture.

15. "We looked into it and in theory it was a sound idea,"
says Bill Marriott. "But, timesharing in practice was
often not up to our standards. If we weren't able to
effect rigid controls on the quality of timesharing that
Marriott offered, we weren't interested in doing it."

16. That opportunity came in 1984, when American Resorts-
-which had recently opened a top-of-the-line timeshare
project on Hilton Head Island called Monarch--initiated
talks with Marriott. American Resorts' concept of
timesharing matched Marriott's, but the company's
ability to carry that vision forward required major
capital. Marriott had the capital.

17. Monarch's success was an encouraging barometer and
Marriott looked to new markets. Orlando was a very
logical choice, because Marriott was already
constructing a 192-acre resort complex: Mariott's
Orlando World Center.

18. Construction of Sabal Palms, the first of two timeshare
resorts adjoining Marriott's Orlando World Center,
began in February 1986. The resort offered Marriott's
customarily luxurious surroundings and by the summer
of 1987 the resort had sold all available weeks.
Construction of Sabal Palms' sister resort, Royal Palms,
began a year later and recently sold out ahead of
schedule.

19. Marriott's fourth timeshare project was at Hilton Head
Island's signature location: Harbour Town. Construction
began in 1987 and was completed in less than a year.
Marriott's Heritage Club at Harbour Town is keyed to the
island's exceptional sports facilities. Ownership includes
special privileges at three golf courses and the Sea Pines
Racquet Club.

20. The 30-villa resort's 1,500-week inventory sold out in
July 1988, just nine months after its initial offering. On
the heels of this success, Marriott decided to build its
third Hilton Head Island timeshare resort, Harbour Club
at Harbour Town.

21. Marriott's newest resort on Hilton Head Island is Sunset
Pointe at Shelter Cove Harbour, which has already sold
out. The resort features 25 timeshare residences, in
addition to 86 existing luxury villas. Marriott is also
developing a 25-acre oceanfront site for a new
timeshare property, which is currently the Hilton Head
Inn. The 288-unit property is called Grande Ocean Resort
and started with brisk sales in April.

22. Marriott's third Orlando timeshare resort, Cypress
Harbour, is a 500-villa property near Sea World. It has
carried forward Marriott's successful Orlando timeshare
vision and is experiencing brisk sales.

23. Marriott's first resort in the west was Desert Springs
Villas at Palm Desert, Arizona. The 236-villa resort is
adjacent to Marriott's Desert Springs Resort & Spa.
Streamside at Vail in Colorado features 150 villas within
two miles of Vail Village and North America's largest ski
mountain.

24. Its Paradise Island Beach Club in the Bahamas was
Marriott's first venture outside the U.S. The property
offers 44 two-bedroom villas with an oceanfront
location. Additional villas are planned. Marriott also
recently announced that it plans a new timeshare resort
on Barbados, next to Marriott's Sam Lord's Castle. It is
called the Barbados Beach Club and started sales in
February.

25. With so many successful timeshare properties, Marriott
serves as an ideal example of hoteliers involved in
timesharing. Marriott now has over 40,000 owners, with
annual sales of more than $100 million. It offers many
travel programs for their owners, including an excellent
internal timeshare resort exchange program, exchanges
throughout Marriott's hotel and resort system,
exchanges through one of the large exchange
companies, one of the largest resale operations in the
industry.

26. Marriott also recently announced that it had signed an
agreement to manage a timeshare resort where it had
no direct capital investment. The company expects this
management contract to be the first of many. Other
hotel companies already involved in timesharing or
considering involvement are expect to follow suit.

27. Bob Miller, MORI's executive vice president and general
manager, feels that Marriott and other hotel companies
can bring much to timeshare resort management. The
advantages include: volume purchases and preventive
maintenance for the property; collection of receivables
and servicing of loans; a national rental program; access
to the company's reservations system; owner
communications, systems support, and development;
strong management; and much more.

28. HILTON TAKES ON TIMESHARING

29. In one of the most exciting timeshare industry
developments since Marriott entered the business,
Hilton Grand Vacations Company was recently formed.
Though Hilton will probably not begin the construction
of new timeshare properties until later this year it is
already entering into the market aggressively.

30. As part of HGVC's formation, it has joined as partners
with a successful timeshare company in Florida, Mariner,
and thus, already has 15 timeshare resorts and more
than 22,000 owners. In addition to excellent resort
properties, Mariner also runs many rental programs and
a resale operation that has one of the highest volumes
of any timeshare company in the United States.

31. As with many hotel companies entering the business,
Hilton's timeshare objectives include: creating a system
of high-quality timeshare resorts throughout the world;
establishing property management and hospitality
services that include reservations, resale, and rental
segments; and establishing a club to provide exchange
services and access to its frequent guest program and
other hotel industry programs.

32. Another key player in this joint venture is Ed McMullen
Sr. of American Resorts. Mr. McMullen has been highly
successful in timesharing and he brings much experience
to Hilton. Both Mariner and McMullen have had great
success with high-quality two-bedroom, two-bath units
of about 1,200-square-feet and this policy will continue
with Hilton and future construction.

33. Many resorts may be built on or near already-existing
Hilton hotels and resorts throughout the world (e.g., the
Caribbean, California, Colorado, Hawaii, Hilton Head
Island, and Orlando). Owners will be able to enjoy all of
the hotel or resort amenities and services. They will also
have access to the Hilton HHonors program and other
vacation packages offered by Hilton.

34. Hilton's timeshare ownership program will be based on
a points system, which has become very popular in the
industry. The firm also plans to interface with Conrad
Vacation Ownership, Hilton's other timeshare program.

35. OTHER BIG NAMES IN TIMESHARING

36. Many other hospitality companies have reviewed the
advantages of timesharing and are entering the
business. Among many, two perfect examples are Disney
and Ramada.

37. Disney Vacation Club (DVC) recently opened its first
units at Walt Disney World. As with many companies in
the industry, DVC tackled two major consumer concerns:
flexibility and "hard-sell" sales techniques.

38. By purchasing a real estate interest in Disney Vacation
Club Resort, guests automatically become members of
the club and are entitled to a variety of exclusive
benefits and privileges. Members also receive an annual
allotment of vacation points, which may be used on
vacations at the resort or at more than 100 worldwide
resorts currently offered through a "Member Getaways"
program.

39. "The flexibility of choosing among several different
vacation experiences is what sets the Disney Vacation
Club apart from many similar plans," says General
Manager Mark Pacala. "The vacation points system
allows members to select the type of vacation best
suited to their needs, particularly as those needs change
from year to year." Each year, members choose how to
use their vacation points, either for one long vacation or
a series of short getaways.

40. For a one-time purchase price and annual dues, guests
may purchase a real estate interest in the resort, which
expires after 50 years. The minimum purchase price is
currently $11,730.

41. According to Mr. Pacala, the Disney timeshare project is
substantially ahead of projections. The entrance and
success of Disney serves as more proof that timesharing
is a viable option for many hotel companies.

42. This past spring, Ramada International also entered into
the timeshare business in the Bahamas. Through the
purchase of a Divi timeshare resort near Nassau,
Ramada is testing the waters to see if timesharing
should be a part of a larger program for them. Divi
recently emerged from Chapter 11 bankruptcy, with
plans to concentrate on its five Caribbean resorts and
ten timeshare locations.

43. With 50 units, the Ramada International timesharing
project is part of the 295-suite Ramada South Ocean.
They offer both floating-time and fixed-week units.

44. With this kind of company, the timeshare industry is
really coming of age. Hotel officials obviously consider it
an excellent way to fill rooms with happy vacationers.

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