If recent announcements from industry heavyweights Orange Lake Resort and Disney Vacation Club are any indication, timeshare development hasn't heard about the recession. As the segment gains mainstream acceptance (see sidebar, Page 69), developers continue to cash in despite a credit crisis affecting many projects across the lodging industry. Last month, Orange Lake Resort and Holiday Inn announced a partnership that could shake up the segment, while Disney Vacation Club has plans for expansion.

“Timeshare has never had a down year, which, for me, coming from the hotel market, is so fascinating,” says Jeff Ballotti, president and CEO of RCI Group. “It really is far more resilient than all the other components of the travel industry.”

WILSON FAMILY RECONNECTS

IHG and Florida's Orange Lake Resort have hooked up to offer a new timeshare brand — Holiday Inn Club Vacations (HCV). The deal represents a return to the fold for heirs of Kemmons Wilson, founder of both Holiday Inn and the Orange Lake family of resorts.

Orange Lake, an industry leader, has more than 115,000 owners. Its flagship resort, a 2,500-villa development, is located next door to Disney World in Orlando. Other, smaller Orange Lake resorts are in Vermont, Wisconsin and Florida.

The exclusive sales and marketing agreement includes formation of the Holiday Inn Club Vacations brand, a flagship Holiday Inn Resort hotel in Orlando, and utilization of IHG's reservation systems to market and rent Orange Lake villas. HCV members can now exchange timeshare weeks for IHG hotel nights. Best of all — at least from IHG's perspective — the British hotelier will make no capital investment, while gaining a new income stream.

IHG may be late for the prom, but it's bringing one of the best-looking girls in the class. Orange Lake is the largest single-site timeshare resort in the world, according to IHG. The $10 billion timeshare industry has enjoyed a 15-percent growth rate over the past 10 years with a mere 10-percent market penetration, according to ARDA.

For its part, Orange Lake is dangling on the arm of a company that owns, manages, leases or franchises over 4,000 hotels and more than 590,000 guestrooms in nearly 100 countries. Look for Orange Lake to make some dramatic moves: “We got into it (the relationship with HI) to grow,” says Don Harrill, president & CEO of Orange Lake Resorts. Asked about the tightening credit markets, Harrill says, “We had a great sales day yesterday.”

Christian Hempell, recently named vice president, HCV, will lead the new brand. “This relationship creates the engine for Holiday Inn Club Vacations to grow in top resort markets where the brand has historically been unrepresented…places like Las Vegas and Hawaii,” Hempell notes.

At the IHG Americas Leadership and Investment conference in Los Angeles, CEO Andy Coslett remarked, “GDP is still rising both here in the U.S. and in all the other major economies…and more and more of the world's population is taking to the road; yes, even at four dollars a gallon. Short-term headwinds we are going to face for sure, but in the medium to long-term the wind remains firmly at the industry's back.”

Priority Club members will benefit from new vacation opportunities, while the 1,400-acre Orange Lake Orlando will add the Holiday Inn brand in December. Also beginning in December, HCV timeshare owners can trade their week for Priority Club points they can use at any IHG hotel. In turn, current Priority Club members can redeem their points at Orange Lake villas.

MAGIC KINGDOM GROWING

In another timeshare testament, Disney Vacation Club is ramping up its timeshare offerings. The 15-story Bay Lake Tower at Disney's Contemporary Resort is scheduled to join Disney Vacation Club (DVC) in fall 2009. And Treehouse Villas at Disney's Saratoga Springs Resort & Spa expects to open next summer. Sales at Bay Lake Tower are already under way for DVC members; sales to the general public and sales for the newest phase of the Saratoga Springs Resort & Spa will start at a later date.

“These new resort developments share a dynamic sensibility, blending modern luxury and design with the nostalgic spirit of two of the most storied resorts in Walt Disney World history,” says DVC President Jim Lewis. Membership in Disney Vacation Club, established in 1991, stands at 350,000, more than double its 2004 membership. Development also continues on Disney's Animal Kingdom Villas at the Walt Disney World Resort in Florida, The Villas at Disney's Grand Californian Hotel & Spa in California and the recently announced resort at Ko Olina on the island of Oahu.

The curvilinear Bay Lake Tower complements the styling of the original building, which opened with the Magic Kingdom Park in 1971. The 295 two-bedroom-equivalent villas will offer guests close-at-hand digs for a quick break from a busy day in the park.

Meanwhile, Treehouse Villas will mark the newest phase of the largest DVC Resort. Phase one debuted in 2004, and phase three sold out earlier this year. Crews are replacing 70s-era villas with brand-new vacation homes honoring the original octagonal design. Sixty three-bedroom homes, raised 10 feet off the ground, will sleep nine and offer cathedral ceilings and flat-screen TVs.

“In developing this resort, we learned a new word, ‘glamping,’ which means glamorous camping,” says Disney Imagineer Todd Thomasson. “The Treehouse Villas will be glamping at its absolute best.”

TIMESHARES FLY IN THE FACE OF ADVERSITY

If you've ever been selected for a free Caribbean vacation (and who hasn't?) you may be wary of enticements aimed at selling timeshares. Now, thanks largely to industry self-regulation, you might want to reconsider. At the beginning of the year, there were 4.7 million timeshare owners in the U.S. alone and — despite the shaky economy — many in the industry see no end to the good times.

One reason could be the relative affordability when compared to the cost of whole ownership, another, the increased flexibility of points exchange: Timeshares are no longer fixed to a certain week or a certain location. And timeshare provides a hedge against inflation, more amenities than hotels and homelike ambience.

“Seventy-six million aging boomers compelled by affordable and flexible vacation real estate that allows them to meet their wanderlust,” offers Howard Nusbaum, president, American Resort Development Association, as the reason for the industry's resiliency.

The State of the Vacation Timeshare Industry: U.S. Study 2008 offers a snapshot of the domestic timeshare industry (excluding fractional resorts and private residence or destination clubs):

“Nearly 4.7 million households own one or more U.S. timeshare weekly intervals or points-equivalents for a total of 6.5 million units — about 1.4 intervals per owner. In the U.S. alone, there are 1,641 timeshare resorts, comprising over 180,200 units for an average resort size of 110 units.

“Last year, sales rose six percent over 2006, reaching $10.6 billion. And roughly 551,000 timeshare intervals changed hands, at an average price of $19,2000. The average cost of weekly intervals was $21,760 and $17, 690 for points-equivalents. Average occupancy in 2007 was 80.1 percent.”

And the resorts get bigger and bigger. In 1975, the average resort had about 27 units. By 1990, that number more than doubled to 56. Today, the average resort boasts more than 100 units. Larger brand developers with greater resources are largely responsible for this trend.

Since 2003, sales have enjoyed compounded annual growth rates of 13 percent. In the same period, compounded annual growth rates for sales price and average resort size grew by six and seven percent, respectively. Survey respondents expected to build 8,000 units in 2008, about the same number as were built in 2007.

The industry credits much of its success to satisfied owners, repeat sales to existing owners and owner referrals. Eighty percent of owners expressed satisfaction with their timeshare purchase; about 70 percent said owning a timeshare has increased the amount of time they spend on vacations; and more than half credited timeshare ownership with improving their health and happiness. What's not to like?