Sunday, Feb. 22, 2009 | 2 a.m.
A bit of good news is out about the Las Vegas economy.
Officials at hotel giant Marriott International Inc. said Friday that despite the economic slowdown, they’re proceeding with plans to double the size of Marriott’s big timeshare vacation resort near the Las Vegas Strip.
Ground will be broken sometime this year on the third tower at Marriott’s Grand Chateau on Harmon Avenue just east of Las Vegas Boulevard, and a fourth tower will be developed after that, said Ed Kinney, vice president of corporate affairs for Marriott Vacation Club International based in Orlando, Fla.
The Grand Chateau, with its four 37-floor towers, is planned to have a total of 895 villas: 224 in each of three towers and 223 in a fourth. Construction on the first two towers is complete, with some of the villas being rented on a nightly basis as a hotel product.
The units rented nightly are either in Marriott’s inventory or belong to Vacation Club timeshare owners who have arranged for Marriott to rent them out.
"Las Vegas has been a good market for us, it has been very strong,’’ said Kinney, adding the Grand Chateau was Marriott Vacation Club’s highest-grossing property in 2008 with $110 million in sales.
Affirmation of the Grand Chateau development plan came after a competitor, Wyndham Worldwide Corp., stopped construction of its high-profile Desert Blue timeshare property near the Rio hotel-casino because of the slow economy.
Marriott’s worldwide vacation ownership business did take a hit in 2008, generating revenue in the fourth quarter of $424 million, down from $627 million in the 2007 quarter. Marriott’s timeshare division posted a loss of $95 million in the 2008 quarter vs. a profit of $116 million in the year-ago quarter.
Overall, Marriott International reported a quarterly loss from continuing operations in the quarter of $10 million or 3 cents per share vs. a profit in the fourth quarter of 2007 of $236 million or 62 cents per share. Revenue companywide fell from $4.089 billion to $3.845 billion.
"Our timeshare business was particularly hard hit by the economic climate," Chief Financial Officer Arne Sorenson said on a Feb. 12
conference call discussing Marriott International’s fourth-quarter results.
"Contract sales of our core timeshare product declined 37 percent during the quarter while sales of our fractional and residential products were negative, reflecting $115 million of sales reversals related to anticipated contract cancellations at three luxury projects."
Marriott said it has trimmed about a quarter of its nonoperations staff in the timeshare business and taken other actions to cut costs by some $65 million to $75 million.
Eight Marriott timeshare sales offices and one call center were closed as part of the cost-cutting plan, but Las Vegas wasn’t affected by these cuts, Kinney said.
He said the Las Vegas timeshare project, like others in the Marriott timeshare family, has benefited from Marriott’s strong brand as well as from 390,000 existing customer families referring friends and family to Marriott timeshares. There also has been strong interest in Marriott’s Las Vegas and Hawaii properties among Asian customers, he said.