When Americans are asked where they would like to travel if money were no object, the No. 1 response year after year is Hawaii. And why not? The weather is the among the world’s best, the people have that aloha spirit, there’s a rich history and culture, the scenery is nothing short of spectacular, and then there are the usual vacation suspects, beaches and golf.
With all these attractions, it comes as no surprise that Hawaii is also a top timeshare destination, with 97 resorts (6 percent of all U.S. resorts), according to a 2018 American Resort Development Association (ARDA) International Foundation study.
That trend will certainly continue as major brands are debuting new properties, and properties of an age that would be termed “legacy” in the mainland, have found ways to remain vibrant.
In February, Hilton Grand Vacations Inc. opened Ocean Tower by Hilton Grand Vacations Club with a traditional Hawaiian blessing and ceremony. The resort is HGV’s fourth property in Waikoloa. Over the course of this multi-phase project, they plan approximately 350 units comprised of studios, one-, two- and three-bedroom suites including upgraded penthouse residences. The project’s initial phase, which is now complete, features 72 units. They offer resort or ocean views and have a full kitchen, private balcony, and spacious living and dining areas. A unique Hawaiian design is showcased throughout the resort with textures and finishes native to the Big Island’s rich, natural environment.
“We are thrilled to open this magnificent oceanfront resort in one of the most beautiful destinations in the world,” says Mark Wang, president and CEO. “Our expansion in Hawaii reflects our long-term commitment to providing a lifetime of vacations for our owners and guests in their most sought-after destinations.”
Part of HGV’s plan to grow its inventory in Hawaii, Ocean Tower is their ninth property in the state of Hawaii. Future openings are targeted for Maui in 2021 and Waikiki in 2022.
Marriott Vacations Worldwide, after its 2018 purchase of Interval Leisure Group, now has 12 resorts in Hawaii, with six part of Marriott Vacation Club, one Sheraton Vacation club, four under the Westin Vacation Club brand, and one Hyatt Residence Club, the Hyatt Residence Club Maui, Ka’anapali Beach, which was awarded the ARDA ACE Project of Distinction Award in 2015. “Hawaii is one of the highest demanded destinations,” says Ed Kinney, global vice president for MVW. “There had been pent-up demand that surpassed our inventory, so we added more product to meet our members’ needs.”
The company is also proactive in meeting members’ needs through the amenities it provides. “It really varies by property and by island, but, for example, in Oahu – Marriott’s Ko Olina Beach Club has a spectacular golf course,” he says. “On-site, what’s important is the location of the property, the pools and beaches. Often, guests are interested in exploring local restaurants, the mountains, and hiking and eco-tourism activities. They really want to explore the culture of each island, which is unique and pretty special.”
Kinney credits the high quality of timeshare resorts in Hawaii for boosting the satisfaction rate among visitors. “This is fantastic for the industry as a whole.”
Managing for Results
When it comes to managing timeshare resorts, Hawaii’s abundant appeal has its fair share of advantages as well as challenges. Nigel Lobo, chief operating officer at Grand Pacific Resort Management, which manages resorts in Hawaii, explains that the Aloha spirit in Hawaii is a natural fit with Grand Pacific’s core purpose of “enriching lives by creating experiences worth sharing.” “It’s really all about providing heartfelt authentic service,” he says. “The Aloha hospitality is totally in synch with what do as an organization.”
In addition to their signature service culture, Grand Pacific’s successful marketing programs contribute to improved balance sheets. “We have had phenomenal success managing the room inventory at our resorts,” he says. “Grand Pacific prides itself on a 98 percent inventory forecasting accuracy rate creating an exceptional level of owner satisfaction as well as valuable rental revenue that yields the best financial outcomes for the resort’s vacation owners association. Our inventory strategies dramatically increase owner use, exceeding industry benchmarks, while generating value in ownership, improved association health and reputation for the timeshare industry as a whole.” Because of this success, Grand Pacific is able to offer competitive wages in this higher cost of living market. “All of this, combined with capturing the hearts of our associates, makes our owners and guests feel very special,” he says. As a result, existing owners continue to be the best prospects for resales weeks and the future success of the resort.
The independent status and organic growth of many timeshare resorts in Hawaii lend complexity. Shawn Ericson, president/owner at Pohaku Resort Management, says one of their managed properties, Pono Kai Resort on Kauai, has three separate homeowners associations. “Many resorts were originally built as whole ownerships and then developers came in and started buying up those condos, annexing them into a new timeshare resort within the master association,” he explains.
These resorts have remained vibrant due to the constant demand. “Even when owners can’t come every year, the exchange companies will tell you, Hawaii is their No. 1 desired destination,” he says. “So owners will get excellent exchanges. In the old days, they sometimes would get two weeks for depositing one week.”
On the flip side, the many regulations in place in Hawaii add additional levels of complexity. “In order to be a manager in Hawaii, you have to have what’s called a Plan Manager’s License, something we don’t have to do anywhere else,” Ericson explains. “Additionally, our banking is done through Hawaiian banks; and from a legal standpoint everything can be a little challenging at times.”
Discussing the legal environment in Hawaii, that seems to be the word of choice. “From an overall regulatory perspective, Hawaii continues to be a challenging state,” says Justin Vermuth, vice president, State Government Affairs and Deputy General Counsel for ARDA. “The product that they offer to tourists is unmatched – from the climate to the overall natural beauty of the islands. As a result though, the legislature consistently looks to tourism to fund many of the infrastructure projects and public services that the state provides to residents. Each year we continue to fight bills that propose to increase the transient accommodations tax (TAT) for this purpose. This year is no different as we are fighting two bills, SB 382 and SB 714 that seek to increase the percentage of maintenance fees that are subject to the TAT.” (At press time, those bills had been defeated.)
When it comes to resales, Hawaii is the place to be. “Compared to most markets, there’s very little resale inventory in Hawaii; especially at the newer resort properties,” says Doug Milbrath, CEO of Bay Tree Solutions Inc. “Our observation has been that owners in Hawaii tend to use their timeshares religiously, and at their home resort. Given the high cost of accommodations in the Hawaii market, timeshare ownership is a great deal for anyone who plans on returning regularly. Even older legacy properties in Hawaii seem to have moderate demand on the resale market, which is the opposite of most other markets where developer sales drive the demand.”
“Some travelers prefer the smaller intimate atmosphere with lower yearly maintenance fees, and some buyers prefer to buy with a branded resort,” adds Michelle Donato, a licensed real estate broker at Owner Concierge Realty. “The great thing about Hawaii is that it has something everyone no matter what the demographic.”
Judy Kenninger of Kenninger Communications has been writing about the vacation real estate industry for nearly two decades.