Monday, Oct. 12, 1998 | 1:43 a.m.
Las Vegas has finally caught the attention of the nation's timeshare developers.
Besides the 20,000 new Las Vegas hotel rooms coming online over the next few years, developers are gearing up to build close to 3,000 new timeshare units over the same period.
If all the units are built, the increase will represent a breathtaking 243 percent expansion in Las Vegas timeshare capacity. A 1997 American Resort Development Association survey found 1,235 timeshare units in the Las Vegas area.
In addition, several national timeshare operators are eyeing the Las Vegas market, and are sure to add even more timeshare units in the near future.
"We've talked to or dealt with most of the public companies," said Jim Beckham, vice president of RCI Consulting, the research division of timeshare services provider Resort Condominiums International LLC. "All of them are looking at Las Vegas."
The result, industry observers say, will be an increase in room capacity even greater than previously realized.
But while it's clear the new hotel rooms will have an impact on existing hotel operations unless there's a big increase in visitor volume, hoteliers shouldn't be too worried about the new timeshare units, developers say.
Industry research finds that a boom in timeshare development could actually help hotel and gaming companies.
Most importantly, timeshare owners are better gamblers -- from a gaming company's standpoint -- than their hotel-staying tourist counterparts.
"Timeshare guests coming to Las Vegas ... don't have to pay for their room," said Beckham, "It's already paid for. So the money that would normally go to pay for a room is disposable."
"Timeshare is a casino's friend," said Stephen Cloobeck, co-chief executive officer of WorldStar Resorts, which is building a 200-room addition to its Polo Towers and Jockey Club timeshare resorts on the Strip. "We bring more people to the community. They don't stay in their rooms. So, they spend more money in the casino."
A recent RCI study found that timeshare owners on vacation typically spend $1,300 more than their non-timeshare owning counterparts: $1,979 vs. $652. Partly this is due to having more disposable income while on vacation. But it is also due to the fact that timeshare owners who gamble have a higher median household income: $66,000, opposed to $47,900 for gamblers in general, the study found.
Timeshares are actually shared real estate investments. Owners buy the right to stay in a timeshare unit for one week each year for anywhere from $8,000 to $25,000, depending on amenities and location. The units are typically much more like furnished apartments than hotel rooms, including separate bedroom and living areas, and partial or full kitchens. Many companies allow owners to exchange their units, essentially letting them trade a week bought at one location for a week at a different location.
In some cases, Las Vegas timeshare owners are so impressed with the city that they return more than once a year, staying in hotels on their repeat visits, RCI found.
But Las Vegas hotels may find a different way to benefit from the increased interest in timesharing, Beckham said. Hotels looking for ways to fill their empty rooms may want to consider turning some of those rooms into timeshare units.
"As hoteliers look at the potential for empty room nights, timeshare may be an alternative product for using those empty hotel rooms," Beckham said.
Right now, Hilton is the only major hotel company operating timeshares in Las Vegas, but more are looking at creating timeshares, industry observers say.
Regardless of the effects on existing hotels, indications are the Las Vegas timeshare market is grossly underserved. And developers are lining up left and right to fill the void.
"I think a sleeping giant has been awakened," said Fred Conte, president and chief operating officer of Preferred Equities Corp., operator of 510 area timeshare units.
The proposed projects are:
-WorldStar Resorts' planned 199-unit addition to the Polo Towers and Jockey Club timeshare resorts.
-Consolidated Resorts Inc.'s plans for Club de Soleil, an 86-unit timeshare project at the southeast corner of Tropicana and Lindell.
-Fairfield Communities Inc.'s plan for a 416-unit resort on Harmon east of Koval.
-Hilton Hotels' plans for a 232-unit timeshare resort adjacent to the Las Vegas Hilton. Hilton already operates a timeshare facility at the Flamingo Hilton on the Strip.
-Reynolds Enterprises' plans for a 384-unit timeshare resort on the northeast corner of the Strip and Harmon.
-Michael Flores' plans for a 150-unit timeshare project on Vegas Plaza, which is just south of Spring Mountain between Industrial and the Strip. Flores is in the process of selling the site to a national timeshare company he declined to identify.
-Southern Nevada Income Properties' plan to convert a 544-unit apartment complex at the southwest corner of Flamingo and Paradise into a timeshare resort.
-Westpark II Partners LLC's plans to convert a 153-unit apartment complex at the southwest corner of Decatur and Reno into timeshares.
-Pacific Monarch Resorts Inc.'s plans for a 557-unit timeshare resort near the southwest corner of the Strip and Shelbourne.
-SilverLeaf Resorts Inc.'s plans for a 157-unit timeshare development on the east side of Koval south of Harmon.
-And Preferred Equities' plans to add 40 to 50 units to its timeshare resort on Winnick behind the Flamingo Hilton.
Both the Reynolds Enterprises and Fairfield plans are subject to litigation that could delay the projects.
There are likely many other projects in the works, industry observers say. These could include a project developed by Florida timeshare developer David Siegel, whose recent pursuit of the Debbie Reynolds hotel-casino was largely fueled by his desire to build timeshares there. Siegel has vowed to enter the Las Vegas timeshare market sometime soon.
The companies planning timeshare projects agree that the Las Vegas timeshare market is underserved.
"We believe there's a good-sized market for (timesharing) here," said Kevin Eszlinger, planning and development manager for Laguna Hills, Calif.-based Pacific Monarch Resorts.
Eszlinger's company is putting its money where its mouth is. When it first looked at the Las Vegas market a year ago, Pacific Monarch started planning a 230-unit timeshare resort with a casino. But after studying the market a bit longer, the company decided to scrap the casino altogether and focus on timeshare units, more than doubling the total to 557.
A drastic increase in timeshare capacity of the sort apparently facing Las Vegas understandably prompts discussions about whether all of these developments will be successful. RCI thinks so, noting a wide discrepancy between the visitor-to-timeshare unit ratio in Las Vegas and that of the resort city to which Vegas is most often compared: Orlando.
Orlando sees 37 million annual tourists, and has 55 timeshare projects -- a ratio of one project per 670,000 visitors, RCI found. In comparison, Las Vegas sees 32 million annual tourists but has only eight timeshare projects -- a ratio of one project per 4 million visitors.
"Potentially, the market in Las Vegas is much larger than it currently is," said RCI's Beckham.
The historic reluctance of timeshare operators to locate here is largely due to their failure to see Las Vegas as a logical destination market, developers say.
"Las Vegas has been a difficult town to understand," said Cloobeck.
But as the market has "matured" in recent years, timeshare operators have begun hearing demand for Las Vegas exchange units from their members.
"We poll our members and existing customers, where would they like to see us," said Thomas Franks, president of SilverLeaf Resorts' acquisitions division. "For us, we have a lot of demand coming from cities we're already in."
Cloobeck agrees that the Las Vegas market is underserved, but argues that timeshare owners thinking about buying here will want to be on the Strip, not miles away, where some of the proposed developments are located.
But Verlin Abbott, vice president of sales for RCI, disputes that notion, noting that there are different segments of the timeshare market.
"There are really two entertainment or vacation markets there in Las Vegas," said Abbott.
One market wants the excitement and accessibility of being near the Strip. But there is another market for people interested in a "more rounded" vacation experience of playing golf, sitting by the pool and enjoying peace and quiet, said Abbott.
"It appeals to a different type of vacationer," said Abbott. "There's definitely exchange demand for both types of experiences."
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