The concept, under which multiple owners purchase a specified “interval” of time, usually a week, out of every year in the life of a property, was introduced in France in the mid-’60s. It spread to the U.S. by 1969 when it made its debut at the Kauai Kalani on the gorgeous Hawaiian Island of Kauai, and has moved increasingly into skiing in the last couple of years. Although ski areas may not be wholeheartedly jumping into timesharing, it’s obvious more and more developers are endorsing the notion. In fact, timesharing is surfacing at just about every major resort of any kind, from the mountains to the ocean’s edge.
Figures from the National Timesharing Council (NTC), one of the seven bodies of the Washington-based American Land Development Association (ALDA), show interval sales have grown from $50-million in 1975 to $300-million by 1978 and an estimated $1.5-billion for 1981. No data is available for the ski industry, the council reports, but even a casual look shows skiing is following the lead of the 12-month sun resorts and finally getting involved with timesharing.
“It’s big,” deadpans Tom Corcoran, president of Waterville Valley in New Hampshire’s White Mountains. “It’s a lot bigger than a lot of people in the ski industry realize and it’s going to get much bigger because it makes so much sense for a destination resort.”
It had become so big and is growing so rapidly, the NTC recently hired a fulltime executive director to oversee and coordinate the council’s activities.
In Canada, timesharing is getting beyond the creeping stage, according to Barbara Spence, who heads the Resort Timesharing Council of Canada, which has offices in Toronto. “We’re not as large as the States yet because we didn’t start as soon, but it’s growing quickly,” she says. The two or three timesharing projects in Canada three years ago have grown to about 15, she says, and that total probably will double by the start of 1983.
Ski areas involved in timesharing north of the border include Whistler, Fairmont Hot Springs and Panorama, all in British Columbia, as well as Falcon Lake in Manitoba, Horseshoe Valley, Ont., Le Club at Mont Ste. Anne in Quebec and another project set for Panorama.
Says Carl Burlingame, editor and publisher of Resort Timesharing Today ($35 for 11 issues, Box 184, Los Altos, CA. 94022), “Timesharing is making a dinosaur of condominiums and second home construction. It’s growing that fast and has that potential.”
Intervals in timesharing generally are sold in one-week time blocs with about 50 weeks a year sold on each property, if possible. The buyer, who may purchase multiple weeks, signs either a fee simple or right-to-use agreement. Fee simple provides outright ownership, complete with tax advantages just like a home mortgage offers, while right-to-use is a fancy name for your basic lease, i.e., non-ownership with that use spread over a specified number of years, at which time it reverts back to the owner; there are virtu- ally no tax benefits to that deal.
“We try to explain the difference as fee simple meaning real property and right-to-use as personal property. The homeowner really is an owner with fee simple; he has more control than with right-to-use,” explains Jim Martin of Butterwick Enterprises of Lakewood, Colo., which has dealt with timesharing projects in Vail, Breckenridge and Winter Park.
In some cases, interval owners may exchange their week for another week at some other resort, swapping a vacation at Jackson Hole, Stowe or Vail for a week in the sun at Waikiki or golfing outside Phoenix. However, as NTC Executive Director Randall Scott notes, “We try to emphasize that buyers shouldn’t think they can buy low and trade high, getting Christmas week in Vail for a poor week somewhere else. You’ll generally be able to trade at the level you buy at.”
Sweetwater Properties of Park City, Utah, which manages timesharing projects at 20 sites—including Jackson Hole, Bear Lake (near Beaver Mountain in northern Utah) and a project under construction right at the base of the Park City slopes, has its intervals color-coded for exchange purposes. Red, white or blue swap with similar colors while a gold premium coding jumps that owner to the front of any line on an exchange; “they pay a premium for that gold coding,” says Jeffrey C. Swinton, vice president and legal counsel for Sweetwater, “and they get that front-of-the-line privilege.”
The earliest timesharing project with a ski area even remotely connected probably was Brockaway Springs near Incline Village at Lake Tahoe, a condominium project which, according to Burlingame, earmarked five or six units out of 100 for timesharing.
“The first major project, though, was at Snowbird in ’74—Iron Blosam Lodge, which had about 100 units in timesharing. I guess Vail is probably the ski resort with the largest amount of timesharing units now. They must have six or seven projects in their community.”
The recession of 1973-75 spurred growth in timesharing and the decision by Playboy resorts to convert part of its operation at Lake Geneva, Wis., and Great Gorge, N.J., to timesharing helped convince the ski industry—and others—that maybe this growing phenomenon held some real potential.
Burlingame says, “There had been less than a dozen timesharing projects anywhere during the first five or six years after Kauai Kalani, but there was a real estate crash with that recession of 1973, so you had all these condo projects, all these developers with unsold inventory and they went into timesharing as a bailout. They figured it would give them some capital and they could go into it until the market straightened out, and then they could go back to whole-unit (condo or vacation home) sales.
“Playboy decided to convert about one-fifth of its Lake Geneva resort, which had about 600 rooms, and that woke up a lot of people. Then, the next year, it couldn’t have been any later than ’77, they converted part of Great Gorge, which has 700 rooms. These were two high visibility projects— and they worked. I think they generated something like $30-million out of them, maybe $20-million from Lake Geneva alone, and all of a sudden a lot of people—not just ski industry people, either—started to say ‘Hey, maybe this thing isn’t so bad.” That really started it.”
Iron Blosam at Snowbird, named for an old mining claim (and misspelled the way the miner registered it), was one of those condo projects, says Gladys Muir, sales director for Snowbird Realty, the resort’s real estate arm. Dick Bass, general partner for Snowbird, came across timesharing on a trip to Europe but was unimpressed, so he simply filed material which he gathered on it. Besides, the Lodge at Snowbird and Turramurra condos were selling out; however, when the 73-75 recession pulled the plug on vacation homes and Iron Blosam sales dipped, it was converted to timeshar- ing. It was not an immediate success but now the 181-unit property has an eye-popping 92 percent sold and Snowbird is considering another 200-unit timesharing development.
“It was really slow at first. There weren’t too many experts in ’74 and we felt our way along,” Muir says. When the resort began to romance the Salt Lake City market, just 25 miles away, for off-season intervals, things picked up dramatically. Locals won’t buy winter intervals, nor do they have to since they live so close, but they form the bulk of the off-season owners, Muir says.
Snowbird’s location in the Salt Lake watershed restricts the amount of residential housing which may be built “so we have to go for the most efficient construction and we’ve found that’s timesharing.” Intervals range from an off-season studio priced at $800 to a two-week Christmas-New Year interval for $30,000.
From a consumer’s standpoint, one major appeal of timesharing is the lower cost—a couple of thousand dollars can buy an annual vacation which is seemingly inflation-proof, an expense far below what a condo or vacation home would run. With today’s muddled economy and still-high interest rates, that’s a bigger consideration than ever, even for the supposedly recession-proof upper and even the upper-upper income buyers who have been scoffing up the $300,000 condos at western resorts, not to mention the million-dollar slopeside vaults at Snowmass and Beaver Creek.
“There are maintenance costs each week, so that adds a little to the cost of the unit, but it still can be a very inexpensive vacation, possibly for the rest of their lives,” says NTC’s Scott. “And it’s also essentially hassle-free: you just show up and use it; forget about whether it’s being rented or what goes on during other weeks because that’s not your worry. You also don’t have to worry about being ‘walked’ because you have a guaranteed right to the unit for your specific week.”
The cost of the interval usually is spread over three to five years. Once that payment is finished, the annual maintenance charges are the only additional costs.
“As people realize they pay the one price and then they’ve got the week— when they figure-in what a similar week would cost in 10, 12, 14 years, they’ll realize timesharing can be a good, low-cost investment,” says Bob
Mulcahey, VP of Smugglers’ Notch in Vermont.
Sweetwater’s Jeff Swinton adds,
“We don’t see a lot of turnover out of our timesharing but we do see a signi- ficant amount of turnover up to a more expensive interval. They may have bought in with a right-to-use unit for 10 or 20 years and, once they’ve sampled it, they decide they like it and want to upgrade to fee simple. It’s a little like someone who goes to a restaurant and starts with a chicken casserole. Once they taste that and feel good about it, they ask the next time for prime rib.”
From an area’s standpoint, timesharing can mean better utilization of a living unit, solid midweek traffic and a better spending visitor. A study for the NTC by Dr. Richard Ragatz of the University of Oregon shows timeshare users at a Hawaiian project spent 62.7 percent more than other visitors to the islands and 46.7 percent more than condo-users in the islands, 38.7 percent more than regular tourists in the surrounding area (San Diego County) of California and at another timesharing project in Florida spent 11 percent more than tourists in the surrounding district (Lee County).
For Tom Corcoran, the better utilization of a unit is a key consideration. “Many condos and vacation homes lie idle five days a week; with timesharing, someone is using it seven days a week, someone who is buying lift tickets for tennis lessons in summer), renting equipment and maybe even spending a couple of nights in the local restaurant(s) or gin mill instead of cooking at home. Jim Martin, whose firm has been involved in two timesharing conversions in Vail, says unit utilization has been a major factor in helping that glittery resort expand its yearround activities. “Five years ago, you could go to Vail in the spring or fall and there wouldn’t be anyone around. Now, though, they’ve got good traffic on a year-round basis; it’s not all timesharing, of course, but you can’t deny the fact those timesharing units have peole in there Monday through Friday as well as on the weekends.”
Another consideration, says Carl Burlingame, is the upper-crust buyer who not only may be looking for better return on his investment but also wants to sidestep any domestic squabbles over renting a high-priced unit.
“You’ve got someone, say, who can afford that $300,000 condominium and he figures it’s going to cost another $25,000, maybe even $50,000, to let his wife decorate it. And she turns around and says she doesn’t want people tramping through there, so he gets no return on that investment unless he sells it. With a timesharing unit, he’s going to get essentially the same use—he’ll buy the week or weeks he figures they’ll use it—and he’ll spend a helluva lot less money.”
Swinton also points to the Ragatz study for the NTC which shows the average timesharing buyer has a profile which would make any area operator’s mouth flood. Ragatz mailed 26,230 questionnaires and received 9,685 replies—an astounding 36 percent rate of return—with the following profile emerging: timesharing buyers averaged $33,500 annual income, 15.4 years education, 45.4 years old, 3.5 members in the household and 89.4 percent married.
“And you just can’t overlook they’re good spenders,” he says, reflecting on Sweetwaters’ experiences. The company began with a golf and marina project at Bear Lake in 1973; today, Sweetwaters controls (“We design, build, sell and manage everything,” he says) timesharing at 20 sites, rang up $30-million in sales last year and projects $100-million in timesharing sales by the end of 1984.
Still, although there is an undeniable tremor of excitement and a forward thrust to timesharing, it’s not all hearts and flowers. There is still some resistance on the part of many areas, especially the East, to jumping on the timesharing bandwagon.
Don Schuster, director of property management for Colorado’s Keystone resort, says, “The management of timesharing can be horrendous. If an appliance breaks, for instance, who pays—the guy who’s in that week or do all the owners divvy-up the cost? You could, if there’s a bad problem, wind up dealing with 50 owners on a problem. Who needs it? We want a long-term partnership with our property owners and you just don’t get that same experience with timesharing.”
At the same time, Schuster concedes being owned by Ralston Purina, as Keystone is, might not mean never having to say you’re sorry but it gives you a leg-up in worrying about cash flow and operating capital, two prime considerations for other developers.
And, as Jim Martin notes, “I wouldn’t want some developer—whether an area or an independent—going into timesharing just for the skier market. You just can’t do it on only the ski season; those weeks probably would sell in any development, so you have to broaden that base and go 12 months a year.” Carl Burlingame says developers have to figure they can sell 40-44 weeks before they edge into the black on units.
Adds Ed Trudel, formerly with the Charter condo project at Beaver Creek and now sales coordinator for the 197unit condo-hotel being built at Stratton Mountain, Vt., “Do you know how much paperwork is involved in timesharing? Each of those units, at least in theory, has to be sold 50 times. That’s a nightmare of paperwork.”
Tony Wise, the impresario at Telemark resort in Wisconsin, says, “Timesharing seems to be a pretty hot idea here in the Midwest. I’m seeing more and more ‘Timesharing’ signs in more and more places. I’m pretty impressed by what I’ve seen but I’m waiting to see the interest rates come down— down, maybe, to about 13 percent— before we do anything about it. We had been seriously considering timesharing for Telemark but when the interest rates went up, so did our plans for it.”
“Frankly, I’m just not sure about timesharing but I have a gut feeling it’s something we should be into,” says the president of Vermont’s Bolton Valley resort, Ralph LesLauriers. “It’s completely different from the traditional condominium sales. This is our first winter and we expect to plug-into the existing traffic here. It’s going to be part of our overall marketing plan; if someone wants a condo, we’ve got it, and we’ve got timesharing if they want that, too.” BV has set aside five condos for timesharing.
“The out-front marketing costs can be substantial,” DesLauriers goes on. “We never had a brochure on our condos, for instance, but now we’ve got one for timesharing. And if someone wants out, that can be a little ticklish, too. With timesharing, you’re trying to sell potential buyers on your resort first and then you’ve got to sell them on timesharing.”
Just down the road, Sugarbush and Sugarbush North have been among the most aggressive in the country in building slopeside condos and amenities, including a milliondollar sports center. Another 150 mountainside condos went up last summer and a year ago the resort converted a base area hotel to a condohotel. But timesharing doesn’t currently fit into the development picture.
“I’ve got an open mind on it,” says Roy Cohen, president of the twin-area complex, “but I want to see how it goes elsewhere in Vermont before we bring it in. This is a very different market from Florida or Hilton Head or Hawaii; they can sell sunshine and the ocean 12 months a year and we just don’t have that good weather all year. We’re more seasonal. That’s just the reality of the situation.”
Timesharing boosters, meanwhile, are not putoff by the reputed downside of timesharing. They see the possible woes as mere pimples compared to the mountain of pluses.
“The ski industry, quite simply, has been slow to recognize the advantages it brings to a resort,” says Waterville Valley’s Corcoran. “Yes, of course, there are aspects to timesharing which, if not properly controlled, could be troublesome, but there also are tremendous advantages which far outweigh the negatives. If timesharing is sold and represented properly— and, I’ll grant you, it’s easy enough to misrepresent it—and the long-term management is solid, it can be golden for a resort.
“For one thing, it gives you midweek occupancy. People are committed for a week, so they take the week, not just the weekend which you’ll get with condo owner or transient skiers. They’ve paid their money in timeshar- ing for a full week and that’s what they’ll take; they’re committed to it. They have a vested interest in using that week. They can’t cancel a week ahead of time.”
Waterville Valley is in the process of getting its first timesharing project as three inns have been bought and are being converted. Corcoran says the company also is seriously considering timesharing for its next development but no time frame has been established for it.
Butterwick’s Jim Martin says condos and vacation homes may be empty up to 90 percent of the year. Timesharing units are far more efficient. “You only build what will be used. In fact,” he says, “if you really were concerned as a planner with the aesthetic or ecological aspects of a development, timesharing makes better sense because you wouldn’t be building a whole lot of units which would be sitting empty so much of the year, as condos and vacation homes do.”
The use factor is one of the stumbling blocks in timesharing’s acceptance by some communities. Some residents get confused over the mathematics involved, listen with one ear and wind up in a panic because with 50 units sold 50 weeks out of the year, they think 2,500 interval owners are going to show up each weekend, creating traffic snarls and other headaches.
“Some people just don’t want to listen,” says Gary Burnett, the NTC’s local ordinance specialist who spends much of his time attempting to put out brushfires ignited by ignorant local officials and residents up in arms over what they erroneously perceive as the dangers of timesharing. Although the concept is gaining more and more acceptance, continued—and possibly stepped-up—education programs must take place to help erase some of the fears about timesharing.
Martin, whose company was embroiled in a verbal shootout at Vail, says local officials sometimes use timesharing as a scapegoat to cover their own inability to solve a problem. When Butterwick bought two existing units and attempted to convert them to timesharing, there was an outcry about pilfering employee housing, which is almost as valuable as snow. A year later, when the owner of one of the other units converted it to a commercial lodge, there was almost no furor, he says.
“The problem you run into is that by restricting growth—certainly as they’ve done in Aspen and, to a lesser degree at Vail—you artificially increase the values of what’s up. Our two buildings (now known as Apollo Park) are right on Gore Creek and that’s very, very expensive property. It’s so valuable that it’s impossible, or almost impossible, to allow it to be used for employee housing,” Martin says.
“Now, if they want to curtail or control growth that’s fine but they also must come up with a solution on what to do with employee housing in that situation. I don’t know what’s the answer, but it’s wrong to say the problem is with the timesharing project.”
Eight states—Nebraska, California, Hawaii, Florida, South Carolina, New Hampshire, Tennessee and Virginia— have passed timesharing legislation. Eleven other states— Oregon, Washington, Colorado, Michigan, Wisconsin, Arizona, Ohio, New York, Nevada, Texas and Minnesota—are studying legislation.
Burlingame, who keeps his hand on the pulse of the industry, says timesharing is no longer simply a case of trying to peddle intervals. Now, he says, the industry is starting to segment and fine-tune its marketing approach away from the mass appeal.
“There’s a nudist resort in Florida which is into timesharing. You’ve got not only segmentation going after the gay market, but it’s becoming so sophisticated, for instance, that one place is going after the 40-to-50-yearold gay with an income within certain limits. The marketing of timesharing in the ski industry may not quite be that refined but it’s one obvious indication of the sophistication which can and is taking place,” the editorpublisher says.
Developers, according to Corcoran, don’t make the big killing a lot of people think because it takes so long to get their money out of a project. Big up-front bucks are needed to get a timesharing project underway and then enough cash is needed to withstand the delays in selling all the intervals. Condo sales are a one-time deal; interval sales go on 50 times or so to close-out a unit.
He says many people look at a unit and figure it goes for $100,000 as a condominium while all the intervals might add up to $300,000. However, that’s with all the intervals sold; meanwhile, the developer is eating the cost of continuing to market the unit(s).
Compensating sales personnel must reflect the intricate nature of the sale. “You’re dealing with real estate and prepaid vacationtime,” he says, “and you’ve got to compensate your sales personnel adequately. If your conversion rate is one out of 10 people who look at a unit buy, then that means you’ve got to get 500 people through to sell-out… and that’s just one unit. Multiply that times the number of units and you can see where the traffic has to grow.”
Management of the units can be handled by the developers. Sweetwater, for instance, keeps everything in-house as it holds onto its projects. Butterwick hires a local management firm. Homeowners associations handle the details for fee simple projects.
One thing that emerges quickly in talking with timesharing executives and sales folks: there is no one, standard timesharing plan. Everyone has “our plan.” The wrinkles help set each plan apart although basically the concepts are the same; technically, though, there are almost as many timesharing formats as there are projects.
“That’s a reflection of the newness of the idea,” says Jim Martin. “Eventually, I think we’ll see the plans start to get more standardized, and I think we’ll see maybe two or three major developers emerge as the leaders with nationwide recognition as the Holiday Inn or the Hilton—that kind of know-what-to-expect recognition— of timesharing. Keith Trowbridge is already doing that with his franchising style at Captran; they provide more assistance than just a consulting arrangement and you pay a fee to use Captran in your marketing.”
As timesharing grows, the industry is also scrambling to protect itself, keeping an eye on shady deals and blowing a whistle on possibly fraudulent practices. No one wants a blackeye and everyone realizes the need to keep the industry image, which is still at least a trifle hazy to so many potential consumers, as unsullied as possible.
The collapse of the Stanley Hotel project in Estes Park, Colo., sent a big ripple through the industry and the NTC has wound up being an unofficial watchdog of sorts in its efforts to headoff possible trouble with shaky proposals.
“I spend more time than I’d really like traveling to meet with resident and local officials and developers,” says the council’s Burnett, “and I’ve had to stand up more than once to tell some developer he’s an ass if he thinks he can make a project go. He doesn’t like to hear it and I don’t like to do it, but if someone is going to try to ramrod some bad concept through, we can’t let it get going without trying to hang a red flag on it.
“Timesharing is getting immense and there are going to be problems, but that’s no reason just to say we can’t cope with it and let some developer go off half-cocked. There’s too much at stake. Too many people have worked too long to make timesharing as viable as it’s become,” he says.
