Timeshare market may soon double

March 3, 2003 - With about 3,400 units currently available in the valley, the timeshare market could double within two years, according to information obtained from Applied Analysis, a local economic research firm.

With more than 5,700 units in the works between about a dozen companies, and a flood of rumors to add to further speculation, there's a good chance at least half of those planned units could make it to market within a couple of years, according to Brian Gordon, a principal of Applied Analysis.

"There's a lot of stuff that may die in the planning stages, but we expect 50 to 75 percent to happen. That's still a lot of units" he said.

Gordon also added that the numbers are rough at this point because, if a Trump/Ruffin timeshare on the property of the New Frontier and projects like the Lady Luck's 792-unit conversion do indeed become reality, these projects, along with the possible arrival of timeshare giant Marriott, could indeed add considerably more units to the local mix.

The flurry of speculation in the past few years goes hand-in-hand with the gaming community's shift to more upscale offerings and diversification of revenue offerings, added Gordon. The upscale emphasis to the Strip's retail sector, spa offerings and restaurants has helped to create a playground for the timeshare community, which is expected to someday rival the likes of Orlando, the current timeshare capitol of the world.

"Gaming revenues as a percentage of the whole have gone down every year. ... People are attracted to that whole (upscale dining and retail) concept," Gordon added.

Bill Thompson, a professor of public administration at UNLV, said the timeshare surge is a sign of visitors wanting to spend more time in Las Vegas.

"I think it's a good sign that people want to invest like this. It indicates that people want to stay in Las Vegas for more than three or four days," he said.

The boom has also brought a greater emphasis on timeshare business and management courses at UNLV's Hotel Administration program.

Robert Woods, a professor who was brought on staff three years ago to help spearhead a program at the school focusing on timeshare management and operations, said what started out as one class with a handful of students is now a program that sees about 100 new faces every academic year.

Woods, however, feels that Gordon's growth predictions might be a little conservative. He estimates in the next few years, Las Vegas will generate $3 billion in timeshare sales between existing properties and those coming online, and that the unit numbers could "easily" double in two years. He also said Las Vegas will some day rival Orlando's 120 timeshare properties, despite only having 16 properties today.

"If you look at the statistics, we get roughly the same number of tourists as they (Orlando) do each year... The timeshare industry has historically been an East Coast concept, but in the last few years the West Coast has been developed, and Las Vegas is the hot spot," he said. "And every major operator knows, if you want your name to be seen by 40 million people, you better be in Las Vegas."

Woods also said the absorption rate in Las Vegas far exceeds the national average, which makes it much more appealing for companies to move forward with expansion plans into the Las Vegas market. According to Woods, the annual absorption rate in Las Vegas is between 25-30 percent, compared to the 15 percent national average. This translates into a property being able to completely sell out within 3-4 years, instead of 6-7 in other areas of the nation.

"That's a good statistic. It shows how much quicker they (timeshares) are sold. It's a complex business, a cash negative business where the developers have to sell quickly," Woods said about the high pressure involved with selling the units.

Fairfield's 250-unit Grand Desert Resort, which opened in the summer of 2001 is nearly sold out, said Fairfield spokesman Adam Schwartz. And the group's second tower, which will essentially double its current total is also off to a swift start, he said, but could not give specific figures.

"We can't get that second tower built fast enough," he said, while adding that the company will be looking to expand further into the market, after its second tower opens in October.

What has also worked for the company is its partnership with Harrah's, which has allowed Fairfield to market with free show tickets, restaurant deals and has also helped to drive gamblers to the Harrah's casino floor.

"It's a formula that has worked well for us," said Schwartz.

"It (partnering with the casino industry) will be the name of the game for all the timeshares opening up," added Woods. "And I suspect it will only be a matter of time before the casino companies get more involved with this (developing their own timeshares) themselves."

Longstanding Las Vegas timeshare Polo Towers, whose owners Diamond Resorts International would not comment for this story, has reaped the benefits of being one of the first timeshares near the Strip.

According to past releases, the company has sold out its first two towers, totaling 320 units and has 65 percent of its 190-unit third tower, the Villas, already sold. The third tower opened in 2000. The company also is in the process of building "the Chateau," a French-themed, 850-unit property, on land adjacent to Polo Towers.

« Go Back

Article Copyright ©: B. Sodoma, LV Business Press