The Hawaii hospitality business, especially the vacation ownership segment, is on fire. As the rest of the U.S. industry creeps back from the downturn, Hawaiian hotels and timeshare properties are charging ahead.

According to the American Resort Development Association and Honolulu-based Hospitality Advisors, occupancy in the state’s 8,609 timeshare units was 90.8 percent last year, well above hotel occupancy of 67 percent for the year. The hotel industry has since rebounded, with occupancy in July at nearly 80 percent in July, up 11 points over the same month a year earlier.

Hilton’s timeshare property in Waikoloa is one of 18 vacation ownership resorts on the Big Island.

“While the timeshare business in Hawaii held up pretty well during the recession, it’s really starting to pick up again,” says Bryan Ten Broek, senior vice president, resort sales & business development for Interval International. “Even before the recession, Hawaii has by been far the most profitable market for most timeshare developers and operators.”

As Jorge Boone of RCI says, much of Hawaii’s tourism fortunes rest with West Coast consumers. “Everyone considers Hawaii to be a magical destination, but it’s been people from California and elsewhere on the West Coast who have largely supported Hawaii’s hotel and timeshare industry,” says Boone, who is senior vice president, business development, North America, for the firm. “Now some timeshare companies are shifting their tactics to explore alternative markets, such as Japan. For example, Disney recently opened a 15,000-square-foot sales galley in Tokyo to market its project in Hawaii.”

Ten Broek sees a number a reasons to account for Hawaii’s successful timeshare industry. For one, he says, the significant consumer demand for vacation ownership product in the state has resulted in very favorable sales and marketing efficiencies for most developers. According to a new study Interval released earlier this month, 77 percent of leisure travelers who are familiar with timeshare say they would like to visit Hawaii in the next two years.

“Because there are fairly high barriers to entry in this market, consumers have a sense of urgency to buy,” he says. “The prevailing attitude is, ‘They may not be building many more timeshare resorts, so I had better buy now.’”

While ARDA says the vacation ownership industry in Hawaii will add more than 4,000 units in the next few years, the biggest project under development is Disney’s Aulani, a nearly $1-billion mixed-use hotel and timeshare resort under construction in Ko Olina outside of Honolulu. The project sits on 21 acres and will have 460 Disney Vacation Club Villas, as well as 359 traditional hotel rooms and suites. The property opens next August.

Other vacation ownership projects are under development elsewhere in Hawaii, particularly the islands of Kauai and Maui, which Ten Broek calls the “epicenter” of the Hawaiian timeshare industry.

Boone sees the high costs of timeshare development in Hawaii as both a challenge and an opportunity. “Consumers understand it’s expensive to build in Hawaii, which means developers can command significant sales price premiums,” says Boone. “However, there’s a great opportunity if someone can figure out how to develop a mid-priced product in the state.”