Tuesday, April 21, 1998 | 10:11 a.m.
The gaming industry is increasing its investment in the timeshare real estate market in Nevada after learning that property owners are steadier casino customers.
A study commissioned by the American Resort Development Association says timeshare owners gamble longer, have bigger casino budgets and are almost guaranteed to make return visits.
The timeshare industry's new focus on a more upscale clientele also makes the gaming industry happy. But executives with ARDA, which is conducting its convention in Las Vegas this week, say the relationship between the two industries is symbiotic since both are growing quickly.
"It's an unprecedented time in our history," said Edwin McMullen, chairman of the board of directors of ARDA at a briefing on a Nevada timeshare industry economic impact analysis.
While Nevada is far from being the hotbed of timeshare activity nationwide, its average growth rate of more than 6 percent per year from 1993 to 1996 and its $1.2 billion economic impact on the local economy in 1996 "exceeded our own expectations," said Frederick Conte, chief operating officer of Preferred Equities Corp. in Las Vegas and the leader of ARDA-Nevada, the state timeshare association.
Las Vegas is home to just over half of the 119,800 timeshare weeks sold in the state as of Jan. 1, 1997, the association's most current estimate.
"Nevada's rich and varied tourism attractions, coupled with our state's progressive development policies, have helped our industry to grow and flourish," said James Broughton, managing director of Lexes Capital. He helped engineer last week's announced formation of WorldStar Resorts, the privately held company developing Polo Towers and the Jockey Club timeshare projects.
"This positive climate has permitted timeshare resorts, in turn, to cultivate an upscale, loyal visitor base and contribute economically through jobs, visitor spending and taxes," Broughton said.
ARDA's study of Nevada indicated 10,400 jobs were created at the properties and their affiliated restaurants and casinos but that the overall impact of the industry resulted in more than twice that many jobs statewide. Comparing its study to figures from the Las Vegas Convention and Visitors Authority, ARDA figures timeshare owners spend more than the average visitor.
In Las Vegas, timeshare owners stay an average 89 percent longer, spend an average 230 percent more over the course of their trips and have a per-person gaming budget that is 40 percent higher than the average visitor. The reason, McMullen said, is that because their lodging is paid for, timeshare visitors tend to increase their discretionary spending, including their gambling budgets.
The ARDA study says in 1996, timeshare visitors average 3.8 hours per day gambling, stayed seven nights in the city, spent $1,080 per trip, including $585 per trip averaged as a gambling budget.
Because timeshares are real estate transactions, owners pay a cut of property taxes. The average owner contributes about $14 per week of time owned. Most taxes are paid for by homeowner associations within the timeshares that collect annual dues for common expenses and property upkeep.
McMullen also said because a timeshare is a long-term real estate investment buyers use their properties year after year -- or they let friends or relatives use the property instead.
A common practice in timeshare use, however, is to trade time for use of an affiliated resort in some other location. One of the new trends in the industry is to establish cruises aboard ships as timeshares. International Cruise and Excursion Gallery of Phoenix is one of the companies putting timeshare owners aboard Carnival and Holland America Line cruise ships.
Since Las Vegas is a high-demand location, traded time rarely goes unused. The end result: There's a solid mix of repeat visitors who statistically spend more here to go along with timeshare-inspired first-time visitors.
But how do the casinos feel about the industry McMullen refers to as "a friendly parasite"?
Many of them are convinced that ARDA is right about the spending demographics and welcome the timeshare visitor, who has an annual median income of $69,000 and a head of household that is a big-spending baby boomer in his early 50s. Some are so convinced timeshare owners are good customers that they are investing in timeshares in various ways.
Hilton Hotels Corp. is a timeshare fan. It operates Hilton Grand Vacations Club, a 200-unit timeshare property nestled among the rooms of the Flamingo Hilton. In addition, Kathy Shepard, vice president of corporate communications for Hilton, said a groundbreaking is tentatively planned in June for a 232-unit timeshare project on the northeast corner of the Las Vegas Hilton property.
Shepard said the Hilton Grand Vacations Club units are 98 percent sold with a sellout predicted by summer. That's 200 units multiplied by 52 weeks, or about 10,400 unit weeks. The Las Vegas area's 60,800 weeks sold at an average price of around $11,700 apiece.
HGVC owners get to use the Flamingo Hilton's amenities, including the pools and room service. Shepard said having the timeshares tied to the hotel allows Hilton the opportunity to introduce the real estate product to a large number of potential buyers who stay at the hotel.
The largest market share in the Southern Nevada timeshare industry is held by the newly formed WorldStar Resorts, which absorbed the assets of Cloobeck Enterprises, owners of the Jockey Club and the Polo Towers. Stephen Cloobeck, co-chief executive officer of WorldStar, last week revealed plans to add a new 24-story structure at Polo Towers.
One of the investors in the venture is Starwood Capital, which is affiliated with the real estate investment trust that acquired ITT Sheraton. Timeshare owners at Polo Towers and Jockey Club will be targeted by Caesars Palace and the Desert Inn, the two Starwood properties down the block from the timeshares.
Other players in the Southern Nevada market are Preferred Equities, which operates the Ramada Vacation Suites; the Carriage House, the Debbie Reynolds Resort Club and the Royal Aloha Vegas and Royal Vacation Suites. Officials at ARDA said there are reports that Dallas-based SilverLeaf and Vistana of Orlando, Fla., are investigating the feasibility of acquiring Southern Nevada property for timeshares.
McMullen said the Nevada market is particularly dynamic because of rapid consolidation within the industry, an increase in branding buyers identify and the spread of the industry to international customers.
Las Vegas' push to develop the global market should stimulate timeshare sales as will the fact that most U.S. timeshare owners come from Nevada's neighbor to the west, California.