1. The Hotel
Industry -
Timeshare

2. TACKLES
TIMESHARING

3. With lower occupancy rates, a
sagging economy, and the
changing demographics of
travelers, hotel industry officials
are constantly searching for ways
to fill rooms. One hot topic is
timesharing.

4. Long considered the bad boy of the
hospitality business, timesharing is
coming of age in both size and
stature. The entrance of companies
like Disney, Marriott, and Hilton has
served notice that timesharing is a
viable occupancy option for the hotel
industry.

5. THE BASICS

6. Timesharing's image of
past decades is quickly
changing. Many
vacationers now view it as
a viable and economical
option for future vacations.

7. The timeshare market is exploding. In
the past two years, almost 500,000
households have purchased a total of
more than 700,000 timeshare intervals.
That means there are more than 3
million owners at more than 3,000
resorts worldwide. Contrary to popular
belief, a recent survey showed that most
of these owners are happy with their
purchase.

8. "It is clear that timesharing is gaining in
popularity, not only here in the United
States, but also across
Europe, Mexico, and in South America,"
says Tom Franks, president of the
American Resort and Residential
Development Association, the timeshare
industry body. "We expect the industry
to double in the next 10 years and the
hotel industry will definitely be involved
in a big way."

9. Timesharing is the most prevalent
form of vacation ownership.
Consumers typically buy one or more
weeks at a specific resort and can
return to that resort every year or
exchange it for a week at another
resort. Prices currently average
around $9,000, with annual
maintenance fees of around $300.

10. Vacation timesharing generally takes one of
two forms: "Fee" timesharing gives the
purchaser permanent rights--in the form of a
deed--to the property. About 85% of
timeshare resorts sell under fee-ownership
agreements. "Right-to-use" timesharing
grants the purchaser the rights to the use of
the property for an established period of
time, such as 30 years. Under this type of
timesharing, the purchaser does not receive
a deed.

11. Rather than return to their home resort every
year, many owners opt to exchange to one of
thousands of other timeshare properties
worldwide. For a small fee, companies like Resorts
Condominiums International or Interval
International perform these exchange services for
member resorts and owners. Many owners say this
exchange privilege was a key reason for buying.
Many hotel chains in the timeshare industry form
their own internal exchange system to complement
the exchange company services.

12. Hotel companies have found that the
basics of timesharing are an ideal fit for
filling rooms. They have accomplished
this by using existing facilities and
services, as well as developing new
properties and support structures. Their
success stories tell the tale of why and
how the hotel industry is tackling
timesharing.

13. THE MARRIOTT
STORY

14. While timesharing has been in the
United States for just twenty
years, Marriott has been around
for more than six decades. In
1984, however, it entered the
timesharing business and has
turned the move into a very
successful venture.

15. "We looked into it and in theory it
was a sound idea," says Bill Marriott.
"But, timesharing in practice was
often not up to our standards. If we
weren't able to effect rigid controls
on the quality of timesharing that
Marriott offered, we weren't
interested in doing it."

16. That opportunity came in 1984, when
American Resorts--which had recently
opened a top-of-the-line timeshare
project on Hilton Head Island called
Monarch--initiated talks with Marriott.
American Resorts' concept of
timesharing matched Marriott's, but the
company's ability to carry that vision
forward required major capital. Marriott
had the capital.

17. Monarch's success was an
encouraging barometer and
Marriott looked to new markets.
Orlando was a very logical choice,
because Marriott was already
constructing a 192-acre resort
complex: Mariott's Orlando World
Center.

18. Construction of Sabal Palms, the first of
two timeshare resorts adjoining
Marriott's Orlando World Center, began
in February 1986. The resort offered
Marriott's customarily luxurious
surroundings and by the summer of 1987
the resort had sold all available weeks.
Construction of Sabal Palms' sister
resort, Royal Palms, began a year later
and recently sold out ahead of schedule.

19. Marriott's fourth timeshare project was
at Hilton Head Island's signature
location: Harbour Town. Construction
began in 1987 and was completed in less
than a year. Marriott's Heritage Club at
Harbour Town is keyed to the island's
exceptional sports facilities. Ownership
includes special privileges at three golf
courses and the Sea Pines Racquet Club.

20. The 30-villa resort's 1,500-week
inventory sold out in July
1988, just nine months after its
initial offering. On the heels of
this success, Marriott decided to
build its third Hilton Head Island
timeshare resort, Harbour Club at
Harbour Town.

21. Marriott's newest resort on Hilton Head
Island is Sunset Pointe at Shelter Cove
Harbour, which has already sold out. The
resort features 25 timeshare residences, in
addition to 86 existing luxury villas. Marriott
is also developing a 25-acre oceanfront site
for a new timeshare property, which is
currently the Hilton Head Inn. The 288-unit
property is called Grande Ocean Resort and
started with brisk sales in April.

22. Marriott's third Orlando
timeshare resort, Cypress
Harbour, is a 500-villa property
near Sea World. It has carried
forward Marriott's successful
Orlando timeshare vision and is
experiencing brisk sales.

23. Marriott's first resort in the west was
Desert Springs Villas at Palm
Desert, Arizona. The 236-villa resort
is adjacent to Marriott's Desert
Springs Resort & Spa. Streamside at
Vail in Colorado features 150 villas
within two miles of Vail Village and
North America's largest ski
mountain.

24. Its Paradise Island Beach Club in the Bahamas
was Marriott's first venture outside the U.S.
The property offers 44 two-bedroom villas
with an oceanfront location. Additional villas
are planned. Marriott also recently
announced that it plans a new timeshare
resort on Barbados, next to Marriott's Sam
Lord's Castle. It is called the Barbados Beach
Club and started sales in February.

25. With so many successful timeshare
properties, Marriott serves as an ideal example of
hoteliers involved in timesharing. Marriott now has
over 40,000 owners, with annual sales of more
than $100 million. It offers many travel programs
for their owners, including an excellent internal
timeshare resort exchange program, exchanges
throughout Marriott's hotel and resort
system, exchanges through one of the large
exchange companies, one of the largest resale
operations in the industry.

26. Marriott also recently announced that it
had signed an agreement to manage a
timeshare resort where it had no direct
capital investment. The company expects
this management contract to be the first
of many. Other hotel companies already
involved in timesharing or considering
involvement are expect to follow suit.

27. Bob Miller, MORI's executive vice president and
general manager, feels that Marriott and other
hotel companies can bring much to timeshare
resort management. The advantages include:
volume purchases and preventive maintenance for
the property; collection of receivables and
servicing of loans; a national rental program;
access to the company's reservations system;
owner communications, systems support, and
development; strong management; and much
more.

28. HILTON TAKES
ON
TIMESHARING

29. In one of the most exciting timeshare
industry developments since Marriott
entered the business, Hilton Grand
Vacations Company was recently
formed. Though Hilton will probably not
begin the construction of new timeshare
properties until later this year it is
already entering into the market
aggressively.

30. As part of HGVC's formation, it has
joined as partners with a successful
timeshare company in
Florida, Mariner, and thus, already has
15 timeshare resorts and more than
22,000 owners. In addition to excellent
resort properties, Mariner also runs
many rental programs and a resale
operation that has one of the highest
volumes of any timeshare company in
the United States.

31. As with many hotel companies entering the
business, Hilton's timeshare objectives
include: creating a system of high-quality
timeshare resorts throughout the world;
establishing property management and
hospitality services that include
reservations, resale, and rental segments;
and establishing a club to provide exchange
services and access to its frequent guest
program and other hotel industry programs.

32. Another key player in this joint venture
is Ed McMullen Sr. of American Resorts.
Mr. McMullen has been highly successful
in timesharing and he brings much
experience to Hilton. Both Mariner and
McMullen have had great success with
high-quality two-bedroom, two-bath
units of about 1,200-square-feet and this
policy will continue with Hilton and
future construction.

33. Many resorts may be built on or near
already-existing Hilton hotels and resorts
throughout the world (e.g., the
Caribbean, California, Colorado, Hawaii,
Hilton Head Island, and Orlando).
Owners will be able to enjoy all of the
hotel or resort amenities and services.
They will also have access to the Hilton
HHonors program and other vacation
packages offered by Hilton.

34. Hilton's timeshare ownership
program will be based on a points
system, which has become very
popular in the industry. The firm
also plans to interface with
Conrad Vacation
Ownership, Hilton's other
timeshare program.

35. OTHER BIG
NAMES IN
TIMESHARING

36. Many other hospitality
companies have reviewed the
advantages of timesharing
and are entering the business.
Among many, two perfect
examples are Disney and
Ramada.

37. Disney Vacation Club (DVC)
recently opened its first units at
Walt Disney World. As with many
companies in the industry, DVC
tackled two major consumer
concerns: flexibility and "hard-
sell" sales techniques.

38. By purchasing a real estate interest in Disney
Vacation Club Resort, guests automatically
become members of the club and are entitled
to a variety of exclusive benefits and
privileges. Members also receive an annual
allotment of vacation points, which may be
used on vacations at the resort or at more
than 100 worldwide resorts currently offered
through a "Member Getaways" program.

39. "The flexibility of choosing among several
different vacation experiences is what sets
the Disney Vacation Club apart from many
similar plans," says General Manager Mark
Pacala. "The vacation points system allows
members to select the type of vacation best
suited to their needs, particularly as those
needs change from year to year." Each
year, members choose how to use their
vacation points, either for one long vacation
or a series of short getaways.

40. For a one-time purchase price
and annual dues, guests may
purchase a real estate interest
in the resort, which expires
after 50 years. The minimum
purchase price is currently
$11,730.

41. According to Mr. Pacala, the
Disney timeshare project is
substantially ahead of
projections. The entrance and
success of Disney serves as more
proof that timesharing is a viable
option for many hotel companies.

42. This past spring, Ramada International
also entered into the timeshare business
in the Bahamas. Through the purchase of
a Divi timeshare resort near
Nassau, Ramada is testing the waters to
see if timesharing should be a part of a
larger program for them. Divi recently
emerged from Chapter 11
bankruptcy, with plans to concentrate on
its five Caribbean resorts and ten
timeshare locations.

43. With 50 units, the Ramada
International timesharing
project is part of the 295-suite
Ramada South Ocean. They
offer both floating-time and
fixed-week units.

44. With this kind of
company, the timeshare
industry is really coming of
age. Hotel officials obviously
consider it an excellent way to
fill rooms with happy
vacationers.

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