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Home My WebLink About2005 HSAC Conference presentation by Dr Pearl Imada Iboshi Impact of Ti*meshare Conversi*ons Presented by: Dr. Pearl Imada Iboshi Department of Business, Economic Development & Tourism to the 2005 HSAC Year-end Conference June 21, 2005 Visitor Activity Visitor Arrival Trends, Both Domestic and International, Continue to be Positive as 2004 Almost Surpassed the Record Levels of 2000 Total Visitor Arrivals - 2000 to 2004 8,000,000 6,948,595 M Domestic ¦ International 6,908,173 790009000 6,389,058 6,380,439 6,303,791 6,000,000 5,000,000 0 : 4,000,000 r 3,000,000 2,000,000 1,000,000 0 2000 2001 2002 2003 2004 Source: Department of Business, Economic Development & Tourism Visitor Activity Airline Seats Increased By 6.9% Through February 2005 and are Scheduled to Increase by 6.3% From March 2005 Through December 2005 Total Airline Seats - 2002 to 2005 12,000,000 ¦ Domestic ¦ International 9,631,650 10,116,724 10,000,000 8,717,623 8,708,313 8,876,911 8,000,000 6,000,000 4,000,000 2,000,000 0 2001 2002 2003 2004 2005* Actual seats through February, scheduled seats for March 2005-December 2005 based on Official Airline Guide March 2005 data Source: Department of Business, Economic Development and Tourism Statewide Hotel Performance Revenue per available room finally recovered in 1999-2000 and again in 2004 as excess inventory created in the early 1990s were absorbed and/or renovated and repositioned in the market 30,000,000 $3,000,000,000 25,000,000 $2,500,000,000 20,000,000 $2,000,000,000 N ~ t Q 2) ~ z 15,000,000 $1,500,000,000 af 00 0 af 10,000,000 $1,000,000,000 5,000,000 $500,000,000 $0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Room Supply O Room Demand - Room Revenue Source: Smith Travel Research, Hospitality Advisors LLC % Indicators of Maturing Market In addition to increasing repeat trips to Hawaii, many of Hawaii's visitors have also become more seasoned travelers to other destinations, including many of Hawaii's competitors 1998 2000 2004 First time visitor to Hawaii 45.2% 41.2% 38.2% Repeat visitor to Hawaii 54.8% 58.8% 61.8% Number prior trips to Hawaii 3.84 4.09 4.47 Source: State of Hawaii DBEDT Trends in Accommodations Demand Hospitality Advisors was engaged by ARDA to analyze the impact of hotel conversions to resort condominium and timeshare use during the period 2000-2004. They found that Hawaii's accommodations market followed the nationwide trend toward greater market segmentation. As a result, Hawaii has experienced an expansion of lodging brands and products such as all-suite, cruise, resort condominium, and timeshare products in the market. Trends in Accommodations Demand Some new brands and products include: DoubleTree, Hilton Vacations, ResortQuest, Fairfield, JW Marriott, Radisson and Marriott Vacation Resorts entering the market. The demand for a quality cruise product has also resulted in a major commitment to the Hawaii market by Norwegian Cruise Lines that will ultimately dedicate four cruise ships to the State. With the increase in accommodation product types, Hawaii's experienced visitors are shifting away from traditional hotel stays to alternative accommodations such as condominium, timeshare, and cruise products. Mix of Accommodation Demand The shift in accommodation choice is profiled below: Exclusive hotel use down to 60.6 percent in 2004 compared to 64.4 percent in 2000 and 68.8 percent in 1996. Any hotel stay, including exclusive hotel use and partial hotel stay, declined to 68.3 percent in 2004 compared to 69.5 percent in 2000 and 71.3 percent in 1996. Use of timeshare has increased to 6.9 percent of 2004 arrivals versus 4.2 percent in 2000. Condo use increased to 16.9 percent of arrivals in 2004 versus 16.8 percent in 2000. Cruise mix has increased to 3.1 percent of arrivals in 2004 versus 1.3 percent in 2000 and 1.0 percent in 1996. Room Nights Sold vs. Visitor Arrivals 2004 room nights sold approximated 1992-93 levels despite near record 2004 visitor arrivals Visitor Arrival Room Demand 1990 697239531 1894099445 1995 695469759 1895769708 2000 699489595 1990569646 2004p 699089173 1891149933 Source: Smith Travel Research, Hospitality Advisors LLC, DBEDT Statewide Visitors Using Hotel Despite the net reduction in hotel supply, hotel room demand has seen strong recovery since 9111. However, hotel use still lags 2000 levels as visitors increasingly turn to alternative accommodations. 5,000,000 4,831,039 4,800,000 497209490 4,600,000 494009000 413521235 49321,602 4,233,728 4,200,000 4,000,000 3,800,000 2000 2001 2002 2003 2004p Source: State of Hawaii DBEDT Statewide Visitors Using Condo The pace of recovery for condo use improved faster than hotel use since 9111., with repeat visitors tending to switch to alternate accommodations. 1,200,000 191699698 191709705 191509000 191389371 1,100,000 1,0429016 190489160 1,050,000 1,000,000 950,000 2000 2001 2002 2003 2004p Source: State of Hawaii DBEDT Statewide Visitors Using Timeshare Despite the strong growth in timeshare, the percentage of those using timeshare is still below seven percent of visitor arrivals, with timeshare units representing 7.6 percent of the state's room inventory. 600,000 5009000 477,415- 417,465 390,784 400,000 351,948 293,316 300,000 200,000 100,000 0 2000 2001 2002 2003 2004p Source: State of Hawaii DBEDT Percent of Statewide Visitors Using Timeshare Despite the strong growth in timeshare, the percentage of those using timeshare is still below seven percent of visitor arrivals, with timeshare units representing 7.4 percent of the state's room inventory 8.0% 7.0% 6.5% 6.9% 6.1% 6.0% 5.6% F-I 5.0% 4.2% 4.0% 3.0% 2.0% 1.0% 0.0% 2000 2001 2002 2003 2004p Source: State of Hawaii DBEDT Percentage of U.S. Visitors Staying in Hotel, Condo and Timeshare U.S. visitors are more likely to stay in alternative visitor accommodations than foreign visitors. 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% I I k I k i 0.0% 2000 2001 2002 2003 2004p 0 Hotel 60.0% 58.3% 60.0% 60.8% 60.3% M Condo 21.6% 20.0% 20.2% 21.1% 20.4% O Timeshare 6.1% 7.8% 8.5% 8.8% 9.5% Source: State of Hawaii DBEDT Statewide Accommodations Inventory 2000 & 2004 Inventory increases were driven by new purpose-built timeshare units and conversion of hotel rooms to condominium and timeshare. As hotels and condo hotels were converted to CPR ownership, a number of units were permanently removed from rental use. 2000 % Share 2004 % Share Apartment/Hotel 641 0.9% 458 0.6% Bed & Breakfast 514 0.6% 643 0.9% Condominium Hotel 1302 19.0% 13,898 19.1% Hostel 297 0.4% 342 0.5% Hotel 50,218 70.4% 48,223 66.4% Individual Vacation Unit 1,173 1.6% 1,867 2.6% Other 785 1.1% 1,157 1.6% Timeshare 4,276 6.0% 6,026 8.3% Total Inventory 71,506 100.0% 72,614 100.0% Source: State of Hawaii DBEDT Accommodations Inventory by Island Oahu was the only island with a net decrease in accommodations inventory. Oahu 2000 % Share 2004 % Share Hotel 31,025 85.5% 30,088 83.6% Condo/Hotel 3,185 8.8% 3,407 9.5% Timeshare 938 2.6% 1,135 3.2% Other 1,155 3.2% 1,357 3.8% Total 36,303 100.0% 35,987 100.0% Maui 2000 % Share 2004 % Share Hotel 8,577 49.1% 8,065 45.3% Condo/Hotel 705 40.1% 705 39.8% Timeshare 973 5.6% L512 8.5% Other 918 5.3% 1,155 6.5% Total 17473 100.0% 17,817 100.0% Source: State of Hawaii DBEDT Accommodations Inventory by Island Kauai had the largest total increase in lodging supply from 2000 to 2004. Bid Island 2000 % Share 2004 % Share Hotel 7,052 72.2% 6,513 64.9% Condo/Hotel 1,240 12.7% 1,147 11.4% Timeshare 819 8.4% 1,338 13.3% Other 663 6.8% 1,039 10.4% Total 9,774 100.0% 10,037 100.0% Kauai 2000 % Share 2004 % Share Hotel 3,019 42.2% 301 38.0% Condo/Hotel 2,062 28.8% 2,119 26.1% Timeshare 1,539 21.5% 2,034 25.1% Other 539 7.5% 871 10.7% Total 7,159 100.0% 8,105 100.0% Source: State of Hawaii DBEDT Accommodations Inventory by Island Molokai 2000 % Share 2004 % Share Hotel 183 42.7% 114 38.1% Condo/Hotel 110 25.6% 140 46.8% Timeshare 7 1.6% 7 2.3% Other 129 30.1% 38 12.7% Total 429 100.0% 299 100.0% Lanai 2000 % Share 2004 % Share Hotel 362 98.4% 362 98.1% Condo/Hotel - 0.0% - 0.0% Timeshare - 0.0% - 0.0% Other 6 1.6% 7 1.9% Total 368 100.0 369 100.0% Source: State of Hawaii D3EDT Statewide Timeshare Inventory ARDA/DBEDT Survey Comparison 2000 Net 2003 Net ARDA DBEDT Difference ARDA DBEDT Difference Oahu 934 938 4 999 985 14 Kauai 1,642 1,539 103 1,996 1,667 329 (4) Maui 1,046 973 73 (2) 1,608 1,465 143 (5) Molokai 7 7 0 7 7 0 Big Island 969 819 150 (3) 1,129 1,035 94 (6) State 4,598 4,276 322 5,739 5,159 580 The above represent the net difference in island and statewide unit totals due to differences in survey timing, unit count and properties surveyed by ARDA and DBEDT. Major differences include the following: (1) DBEDT survey did not include the 108 unit Kauai Coast Resort; other large difference noted for Embassy Poipu and Hanalei Bay (2) DBEDT survey did not include Maui Marriott in 2000, but was added in 2001; other differences noted in smaller properties. (3) DBEDT survey did not include Holua Resort in the 2000 survey; other differences noted in smaller properties. (4) DBEDT survey did not include Marriott Waiohai and Kauai Coast Resort in 2003, other differences noted in smaller properties.. (5) DBEDT survey did not include Westin Kaanapali Ocean Resort; other differences noted in smaller properties. (6) DBEDT survey did not include Royal Sea-Cliff Resort; other differences noted in smaller properties. Source: State of Hawaii DBEDT, ARDA Pre-2000 Major Timeshare Additions Conversion # Year Property Units Comment Re-developed and reopened after Hurricane Iniki destroyed the Marriott Kauai Beach former Westin Kauai Resort, of 1995 Club 232 which 232 are timeshare units with the remainder 356 rooms operated as hotel units. Construction began at the time of Embassy Vacation Hurricane Iniki. Resort construction 1996 Resort Poipu Point 219 completed in 1995 as a condominium hotel and was converted to timeshare in 1996. 1998 Embassy Vacation 413 Converted in 1998. Resort Maui (1) Hilton hotels also purchased the former Waikikian Hotel site in 1999. We note, however, that the prior 135 room Waikikian Hotel was closed in 1996 due to the hotel's deteriorating conditions and financial failure of its previous owner. Because of the hotel's demolition prior to Hilton's announcement regarding a potential timeshare development at the site, the prior demolition of the Waikikian Hotel is not considered a conversion. Source: State of Hawaii DBEDT, industry interviews, various news articles Profile of New "Purpose-Built" Timeshares Island Property Name Year # Units Oahu Marriott Ko Olina Beach Club 2003-2004 103 Kauai Marriott Waiohai (1) 2003 203 Maui Westin Kaanapali Ocean Resort 2003 280 Worldmark at Kihei 2001 200 Big Holua Resort at Mauna Loa Island Village 2000 73 Kona Hawaiian Resort 2001 78 (1) This property was demolished in 1992 by Hurricane Iniki and had been closed for the past 11 years and therefore was treated as a new build rather than a conversion. Source: State of Hawaii DBEDT, ARDA, various news articles Hotel Conversions to Timeshare 2000 to 2004 # Unit Prior Reduction in # Timeshare Long-Term Conversion to Units due to Units after Hotel Unit Property Name Year Type(') Conversion Reconfiguration Conversion Reduction (3) Hilton Hawaiian Village 2004 Hotel 138 66 72 138 Kalia Tower Maui Marriott Resort & 2004 Hotel 720 408 196 (2) 720 Ocean Club Kauai Coast Resort at the 2000 Hotel 243 135 108 243 Beachboy Total 1,101 609 376 1,101 (1) Use classification per DBEDT Visitor Plant Inventory Report. (2) 720 hotel units were reconfigured to 312 timeshare units, of which 196 units were reported as timeshare in 2004, with the remaining 116 units planned to be added to timeshare inventory in 2005. (3) Long-term hotel unit reduction refers to total units no longer available for hotel rental over the long term once the timeshare project sells out. Source: State of Hawaii DBEDT, ARDA, various news articles Statewide Condo Conversion Overview 14 hotel and condo hotel properties representing 2,687 units were converted into CPR condominium use and ownership between 2000 and 2004. Most of the converted properties offer condominium owners the option to place individual units into a hotel rental pool that typically is managed by a hotel management company. Of the 2,687 hotel and condo/hotel units that have been converted in the past four years, 917 units were permanently removed from transient hotel use. Owners of the remaining converted inventory have the option of using the condominium for residential use or use as part of the property's hotel rental pool. First Time vs. Repeat Timeshare Users The percentage of repeat visitors using timeshare has grown dramatically to almost two-thirds of all visitors using timeshare 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 2000 2001 2002 2003 O First time 30.7% 28.6% 27.6% 26.7% ¦ Repeat 69.7% 71.4% 72.4% 73.3% Source: State of Hawaii DBEDT Timeshare Purchasers in Hawaii are Overwhelmingly Repeat Visitors The vast majority of new timeshare owners were repeat visitors to Hawaii prior to their timeshare purchase. Oahu Kauai Maui/Molokai Big Island 0 17.9% 19.2% 16.6% 15.3% 1 19.6% 17.4% 20.7% 23.4% 2 20.7% 23.3% 20.7% 18.5% 3 or 4 12.8% 21.3% 21.9% 20.5% 5 or more 29.3% 18.8% 20.3% 22.3% Source: KPMG, ARDA Per person per day spending US West by Hotel Only/Timeshare Only: 2004* 90 80 $79 ¦ Hotel Only ¦ Timeshare Only 70 PPPD hotel only: $181.09 -PPPD timephnre in 97 60 50 40 $38 30 $28 20 $19 $18 10 $7 0 Lodging Food Entertainment Transportation Shopping Other *Preliminary 2004 Hawaii State Department of Business, Economic Development and Tourism Per person per day spending US East by Hotel Only/Timeshare Only: 2004* 90 $80 ¦ Hotel Only 80 ¦ Timeshare Only 70 PPPD timeshare: $119.13 60 50 $42 40 $32 $28 30 $22 $22 18 $23 20 - $16$16 $ $9 10 - QA 0 Lodging Food Entertainment Transportation Shopping Other *Preliminary 2004 Hawaii State Department of Business, Economic Development and Tourism Mahalo Latest Data and Forecast me-se--ci rc h p ._,I FYd, r DE'EDT ~ _rlr.rFc L Quarterly Sf atistical 8r Economic Repor! ' DBEDT Selected Economic AcUvi[ies c o n o m i s 5 xtainable Tounzm Proiect Tinto Series \ n ci I y s S - Visitor Statistics ~".`_9 rn~rahl., _ _ r _ of x-I. 1'd ~.r-s i v I S I o n Is err ~rir n.,l (SPreadxh'eet) S--, of Cru eshiv PaszengSrz :nH h-.0 L.i -Pl err it Visitor 5atmf_ ion Activity Repor! '2002 I . -iii l Hizr„ris._1 r Da13 (Spreadsheet) Annual 1Vixilor Research Report The Research and Economic Analysis Division 2002 I Gon1 I 20np I 1??'? (R EAD) c nducts r rch and a alysis on The E.-ononiir •-onrriburion of :i,r ,il•.iL.i trends, issues and policies affe Ming Haai's economy; and collects and interprets statistics State of Hawaii Data Book on all aspects of business activity, including the 2003 updaaes I zooz I zoul I zt ~u stry, the demography, and the ? I tae,. I visitor indu th=, Has, C, Dixo _ r •der si i , economy the State. Census and Population Hawaii censux 2000 Hawaii Census 1990 Population E,N-fe Data County Information Facts and Figures Honolulu I Main I Hawaii I Kauai DBEDT Library online catalog Web Guides State of Hawaii Federal Activities in Hawaii Dept. of Business, Economic Development 8e u Freqcuently Q stASkedn ind esliotns Tourism Research and Economic Analysis Division p.0. Box 2359 PUbI1CaYlOnS Honolulu, Hawaii 96804 (808) 586-2423 - FAX: (808) 58]-2]90 Other Sites with Statistics librar y~odbedt .hawaii.gov ro Ger I\.1(Ti"K'. aem. Reader' Statistics & Economic Information I DBEDT Home Page www3.hawaii.gov/dbedt