It's About Time

Timeshare Projects Ramping Up in Anaheim; Disney, WorldMark Lead Way

The once-maligned timeshare industry is back.

Redmond, Wash.-based WorldMark by Wyndham (formerly Trendwest, a unit of Cendant Corp. in New York) plans to open a 253-room, 14-story timeshare hotel in Anaheim next year.

And Walt Disney Co. plans to expand its Grand Californian Hotel & Spa to include 50 Disney Vacation Club rooms, which are set to open in 2009.

These two developments will bring timeshare and vacation club projects in the Anaheim Resort area to four. Others are the 136-unit Dolphins Cove Resort, also operated by WorldMark, and the 139-unit Peacock Suites by Northbrook, Ill.-based Shell Vacation Club LLC a block from the new WorldMark project.

Peacock Suites is looking forward to more timeshares coming to Anaheim, said Jeff Pank, who manages the company's Anaheim timeshares. He said Peacock Suites has been sold out for several years and doesn't fear the competition.

WorldMark has high expectations for its project, which is adjacent to GardenWalk-a 400,000-square-foot lifestyle center that opened its first restaurants last month.

And Disney Vacation Club has a proven track record, with about 350,000 members worldwide and 2,086 two-bedroom units in Orlando.

Disney Vacation Club President Jim Lewis said visitors to the Disney Vacation Club Anaheim sales office regularly asked for timeshares in OC.

"We need product here," he said.

In the mid-1990s, me company planned to spend about $250 million to develop up to 650 timeshares on 70 acres at Newport Coast.

Disney later sold the parcel to Bethesda, Md.-based Marriott International Inc., which developed Marriott Newport Coast Villas. That timeshare debuted in 2000 and now is nearing completion with 650 two-bedroom villas.

Marriott is widely credited with being the first major hotel brand to move into vacation ownership units in the 1990s, changing the model of timeshares and bringing credibility to the business. By creating a points-based exchange system that could be used worldwide, the company eliminated a common consumer complaint about timeshares: difficulty in getting choice dates.

Other hoteliers have followed, including White Plains, N.Y.-based Starwood hotels & Resorts Worldwide Inc. and Chicago-based Global Hyatt Corp.

'Today's timeshare industry is the major hoteliers, where at one time it was a niche real estate product," said Howard Nusbaum, president and chief executive of the American Resort Development Association in Washington, D.C., which represents the timeshare industry.

Baby boomers are driving the rebirth of timeshares with a desire to own flexible vacations and travel with their families, he said.

Timeshare sales rose 16% from 2005 to 2006, reaching the $10 billion mark, according to a study by Ernst & Young last summer.

Sixty-one percent of owners in the Ernst & Young survey said the most attractive reason to buy a timeshare is proximity to attractions and entertainment, while 50% said they bought for proximity to the ocean or beach. Few destinations have the draw of both Disney theme parks and the coast.

"I think Orange County has the potential to be a huge growth market," Nusbaum said. 'There's lots of tourism potential and a rich diversity in attractions."

California is one of the leading states for timeshares with 123 resorts and 10,700 units generating $426 million in tax revenue in 2005, according to a recent PricewaterhouseCoopers survey. According to the study, 1.5 million timeshare vacationers visited California in 2005, spending an average of $211 per day, with an average trip lasting 7.5 nights, far outpacing average tourist spending and staying patterns.

The concept of timeshares isn't new in OC. The first opened in Laguna Beach in 1979. Laguna Hills-based Pacific Monarch Resorts was one of the earliest developers. The company built the Capistrano Surfside Inn and Riviera Beach & Spa in the 1980s. Both sold out by 1990.

But coastal timeshares came to a grinding halt as cities-fearing the loss of bed tax revenue-restricted developments, according to Art Spaulding, partner in the Irvine law firm of Cox, Castle & Nicholson LLP, which has time-share clients.

The tax argument comes into play with the newer condominium hotel concept like the Hard Rock Hotel in San Diego, co-developed and solely managed by Newport Beach-based Tarsadia Hotels. While all the Hard Rock's units are individually owned, the amount of time owners can stay each year is limited. When the condominiums are rented as hotel rooms, the city gets bed taxes. When the owners are in town, the city gets nothing.

It's not just the city that has limited timeshares.

Spaulding said the California Coastal Commission so far hasn't been that friendly.

"The coast is the holy grail," for developers who can get approval, he said.

Carlsbad, Oceanside and Marina del Rey have timeshare projects in the works, but so far there are none in OC-though there is talk of possible projects in Anaheim and Huntington Beach.

Copyright CBJ, L. P. Dec 3-Dec 9, 2007
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