Orlando, Las Vegas hubs for growth, demand

Hotel & Motel Management, Oct 4, 2004 by William Atkinson

Timeshares are gaining popularity around the country, but the two giants in terms of location are Orlando and Las Vegas.

"These are enormous markets by themselves," said John Burlingame, executive v.p. of Chicago-based Hyatt Vacation Ownership.

The question, then, is whether the two hottest markets are at risk of cooling down or being tapped out. Probably not, according to industry experts.

"I don't think Orlando and Vegas are tapped out," Kathy Conroy said, managing director, HVS Timeshare Consulting, which is based in Miami. "We are seeing continued growth in both locations in terms of dollar volumes of timeshare sales. I don't see this changing for the foreseeable future."

One reason she believes these two locations continue to produce such numbers is that both cities continue to be fresh and dynamic.

"They always have something new in entertainment to offer people," she said. "People may not go every year, but they certainly go every couple of years."

But there is a caveat when it comes to expanding in either Las Vegas or Orlando. "The competition is very keen in both locations, because all of the major timeshare players are represented there," Conroy said. "If you're a new entrant, these markets may be very difficult to penetrate, unless you have a solid business plan with an excellent and experienced sales and marketing team, or a joint venture with an experienced company."

"Orlando is the largest market in world and, I suspect, will remain so for some time because of the attractions and the weather," Burlingame said.

"Orlando produces about $700 million of volume a year and gets more tourists a year than Las Vegas," said John Sweeney, chairman and c.e.o. of Global Resorts International, which is based in Las Vegas.

"Orlando is the biggest in our industry and continues to be a highly-demanded market," said Dave Gilbert, v.p. of resort sales and marketing for Miami-based exchange company Interval International. "However, it is also one of the most competitive. It is a difficult market to enter because the access to lead generation is very difficult and expensive to obtain."

The channels to gain access to potential purchasers have already been taken up by existing players, he said. While Orlando remains hot and is expected to continue being so, most observers see even more potential for Las Vegas. "Las Vegas continues to be a great destination for people who want a complete array of activities," Burlingame said. "I expect this area will grow substantially in terms of its desirability for vacation ownership." Gilbert also believes Las Vegas is in extremely high demand.

"However, it doesn't have as high a density of timeshare as Orlando," he said. "There is more room for expansion here than in Orlando, and companies still have access to lead generation."

Las Vegas is the fastest-growing timeshare market in the country, according to Sweeney, and he cited three reasons for its continued explosion of growth.

First, while Orlando has been the leader for the last 20 years or so, Las Vegas is growing in volume. One reason is that the average size of projects in Vegas is larger than the average in the United States. The average size of a timeshare resort in the United States is about 83 units. The average size in Las Vegas right now is approximately 470 units.

"In terms of projects in the pipeline in Las Vegas, the average size is over 600 units," Sweeney said. "We have three projects in the works of over 1,000 units."

Second, while Orlando gets more tourists than Las Vegas, the effective buying income of tourists visiting Las Vegas is much greater than Orlando, Sweeney said.

Third, the casinos are a major source for lead generation.

"They aren't in the timeshare business yet, but it's inevitable that they will be," Sweeney said. "When that happens, you'll begin to see logarithmic growth in timesharing."

"I expect that Las Vegas will become the first billion-dollar market in the timeshare market," he said.

hmm@advanstar.com