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Maui moving to discourage time shares
Maui moving to discourage time shares
By Kristen Consillio
Pacific Business News (Honolulu)
Updated: 8:00 p.m. ET July 9, 2006
With nearly 2,300 new time-share units set to be built by 2010, Maui County officials are trying to discourage more development by imposing higher taxes, even though a new study they commissioned found that time-share owners weren't a drain in the economy.
Despite the study's findings, some county officials say time-share development is out of control and threatening the direction of Maui's carefully tended upscale tourism industry.
"I don't see it being a need in our county to have time share," said G. Riki Hokama, Maui County Council chairman. "That's not the visitor I want here."
The dramatic growth of time-share projects prompted the county last year to create Hawaii's first property tax category specifically for those properties. The tax is $14 on every $1,000 of a property's assessed value. Officials on Kauai and the Big Island are considering similar taxes.
The Maui County Council also proposed that time shares have their own zoning category so that government can regulate development. But state legislators shot down the proposal earlier this year.
Even as brands like Ritz-Carlton get into what they call the "fractional ownership" of luxurious condominiums at Kapalua in 21-day increments starting at $300,000, Maui officials say they are convinced time-share owners are contributing less in taxes than hotel guests and requiring more public services like roads and water.
Officials say they also are concerned that converting hotels to time shares will put people out of work and will lead to more people crowding the highways because time shares are usually booked 52 weeks a year, unlike hotels that rarely hit 100 percent occupancy.
Maui Mayor Alan Arakawa said the objective of the tax is to discourage wholesale conversions of large resorts into time shares, which he believes takes away from the convention business and will send the wrong message to affluent visitors.
"We have to be careful that we don't overdo it and don't destroy the very industry that's brought us to the top," Arakawa said.
The council paid Hospitality Advisors, a Honolulu-based tourism consultancy, $75,000 to prepare a report reviewing the impact of time-share conversions. The study, based on state data, found that time-share visitors account for only 1.8 percent of the daily island census and that what is really driving the overcrowding is the number of people moving to Maui.
While time-share visitors spend less than hotel guests, they stay slightly longer and spend more per person per day on nonlodging than condominium visitors, the study found.
"There's no question that tourism contributes to the pressure on Maui's infrastructure," said Joseph Toy, president and CEO of Hospitality Advisors. "However, we were asked to look specifically at impacts from time-share conversions, which appear to be a small part of the overall market."
Executives of time-share properties say they already are paying their fair share in taxes, which are passed on to customers through the transient occupancy tax applied to maintenance fees. Time-share managers are still unhappy about the jump in the new property tax from $8 per $1,000 in 2005 to $14 this year.
"When you jump it up 75 percent in one year that's a real shock," said Chad Jensen, general manager of Marriott's Ko Olina Beach Club and chairman of the Hawaii chapter of the American Resort Development Association. "It certainly doesn't help time-share development because it adds to costs for developers because they're responsible for paying for the unsold weeks."
Hotel executives contend the foremost benefit of time share is its high and consistent occupancy, which tends to be less affected by world events and downturns in the economy.
"What it does for the local economy is keeps people employed," said Craig Anderson, general manager of the Westin Maui. "If this wasn't something people were interested in it wouldn't be selling. People are voting with their pocketbooks and companies are responding to market demand."
URL: http://msnbc.msn.com/id/13796096/
By Kristen Consillio
Pacific Business News (Honolulu)
Updated: 8:00 p.m. ET July 9, 2006
With nearly 2,300 new time-share units set to be built by 2010, Maui County officials are trying to discourage more development by imposing higher taxes, even though a new study they commissioned found that time-share owners weren't a drain in the economy.
Despite the study's findings, some county officials say time-share development is out of control and threatening the direction of Maui's carefully tended upscale tourism industry.
"I don't see it being a need in our county to have time share," said G. Riki Hokama, Maui County Council chairman. "That's not the visitor I want here."
The dramatic growth of time-share projects prompted the county last year to create Hawaii's first property tax category specifically for those properties. The tax is $14 on every $1,000 of a property's assessed value. Officials on Kauai and the Big Island are considering similar taxes.
The Maui County Council also proposed that time shares have their own zoning category so that government can regulate development. But state legislators shot down the proposal earlier this year.
Even as brands like Ritz-Carlton get into what they call the "fractional ownership" of luxurious condominiums at Kapalua in 21-day increments starting at $300,000, Maui officials say they are convinced time-share owners are contributing less in taxes than hotel guests and requiring more public services like roads and water.
Officials say they also are concerned that converting hotels to time shares will put people out of work and will lead to more people crowding the highways because time shares are usually booked 52 weeks a year, unlike hotels that rarely hit 100 percent occupancy.
Maui Mayor Alan Arakawa said the objective of the tax is to discourage wholesale conversions of large resorts into time shares, which he believes takes away from the convention business and will send the wrong message to affluent visitors.
"We have to be careful that we don't overdo it and don't destroy the very industry that's brought us to the top," Arakawa said.
The council paid Hospitality Advisors, a Honolulu-based tourism consultancy, $75,000 to prepare a report reviewing the impact of time-share conversions. The study, based on state data, found that time-share visitors account for only 1.8 percent of the daily island census and that what is really driving the overcrowding is the number of people moving to Maui.
While time-share visitors spend less than hotel guests, they stay slightly longer and spend more per person per day on nonlodging than condominium visitors, the study found.
"There's no question that tourism contributes to the pressure on Maui's infrastructure," said Joseph Toy, president and CEO of Hospitality Advisors. "However, we were asked to look specifically at impacts from time-share conversions, which appear to be a small part of the overall market."
Executives of time-share properties say they already are paying their fair share in taxes, which are passed on to customers through the transient occupancy tax applied to maintenance fees. Time-share managers are still unhappy about the jump in the new property tax from $8 per $1,000 in 2005 to $14 this year.
"When you jump it up 75 percent in one year that's a real shock," said Chad Jensen, general manager of Marriott's Ko Olina Beach Club and chairman of the Hawaii chapter of the American Resort Development Association. "It certainly doesn't help time-share development because it adds to costs for developers because they're responsible for paying for the unsold weeks."
Hotel executives contend the foremost benefit of time share is its high and consistent occupancy, which tends to be less affected by world events and downturns in the economy.
"What it does for the local economy is keeps people employed," said Craig Anderson, general manager of the Westin Maui. "If this wasn't something people were interested in it wouldn't be selling. People are voting with their pocketbooks and companies are responding to market demand."
URL: http://msnbc.msn.com/id/13796096/
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