Timeshare study shows $66-billion industry impact

Hotel & Motel Management, June 21, 2004 by Elaine Yetzer Simon

Washington -- The timeshare industry has a greater economic impact than most people realize, according to a national study issued by the ARDA International Foundation, the research and education arm of the American Resort Development Assn.

The study was conducted for AIF by PricewaterhouseCoopers to analyze the impact of timeshare developers and owners, and their value to the U.S. economy.

Combined direct and indirect economic impacts as well as fiscal contributions for the industry totaled $44.4 billion of output, 476,100 full- and part-time jobs, $15.9 billion in payroll and related income, and $6.4 billion in tax revenue during 2002.

"When a local community understands the impact, they will understand that it's more than hotels in many cases," said Howard Nusbaum, president and c.e.o. of ARDA. "Just like a hotel guest offers more economic opportunity than someone who comes to town for lunch, timeshare offers more than a hotel because guests feel affinity for the place. They are going shopping and doing other activities."

Scott Berman, a partner with PWC, agreed that the effects of the timeshare industry are far-reaching.

"The economic impact of the timeshare industry does not end with the initial purchase," he said. "Timeshare purchases, combined with other expenditures and owner and guest spending during vacation, generate tremendous income as well as a ripple effect through other parts of the economy."

The study showed that timeshare owners took 4.9 million timeshare vacations during 2002 and spent an average of $1,784 per trip, yielding total estimated spending of $8.7 billion.

Prospective and existing owners spent about $5.5 billion purchasing new timeshares and contributed $3 billion toward maintenance fees for existing units during 2002, with a combined total of $17.2 billion in purchases representing direct industry output.

"Having some sense of scale or quantity allows our members to see the scope of our business," said John Burlingame, chairman of ARDA and executive v.p. of Hyatt Vacation Ownership. "When we meet with government officials, it's important for them to understand what we contribute. This sets the baseline information we haven't had before."

The industry's total direct impact in 2002 included $17.2 billion of purchases, 222,500 jobs and $6 billion of income. Direct resort impacts were substantial as timeshare resorts, corporate offices, call centers and off-site sales offices employed an estimated 102,900 people who earned $3 billion in payroll and related income or labor income. Direct resort construction impacts that occurred as the industry expanded existing resorts and built new ones to keep pace with sales supported about 10,900 jobs and $490 million in payroll and related income.

The indirect output of the timeshare industry resulting from the disposable income of industry employees and the purchase of goods and services by companies includes $27.1 billion in purchases, 253,600 jobs and $9.9 billion of income during 2002.

The complete fiscal impact totaled $6.5 billion in tax revenue for the year, with timeshare property and occupancy taxes representing $310 million, timeshare employee taxes accounting for $780 million and taxes on activities in other industries totaling $5.3 billion.

"I wouldn't have guessed [the economic contribution] would be so much," Burlingame said.

George Donovan, president and c.e.o. of Bluegreen Corp., said he is pleased with what the study revealed.

"We have used these studies in the past and find them to be particularly useful, especially at the front end of potential acquisitions and even during the permitting and approval stages," he said. "The studies help communicate the positive aspects of timesharing and validate our contributions to the local community in which we plan to operate. They show first-hand that our industry's strong marketing tactics bring a significant amount of people and dollars into their community and that we create significant employment opportunities for their region."

Survey respondents reported that during their most recent U.S. timeshare vacation, their traveling party consisted of an average of 3.6 people (2.9 adults and 0.7 children). The timeshare vacation includes the full length of the timeshare stay, plus additional time spent in the resort area before or after the timeshare stay. On average, respondents spent 6.8 nights in the resort area at timeshare resorts, including bonus time and timeshare rentals. In addition, respondents reported staying one night on average in other accommodations, including hotels, recreational vehicle parks, and the homes of friends and family. In total, the average timeshare vacation was 7.6 nights.

The survey comprised 3,359 timeshare owners and 54 timeshare entities covering about 34 percent of existing timeshare resort units and about 67 percent of industry sales. According to ARDA, there were 1,590 timeshare resorts nationwide with a total of 132,000 units as of Jan. 1, 2003. The next issue of the survey is underway.