Timeshare in Hawaii: Build it and They Will Come
Nobody is building stand-alone hotels in Hawaii anymore because timeshares pay off sooner and return visitors are almost guaranteed – without further marketing
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Despite timeshare’s growing importance in Hawaii’s hospitality industry, it’s still misunderstood. In January, Gov. Neil Abercrombie proposed legislation that would have more than tripled the transient accommodation tax paid by timeshare owners. According to the governor, this was an attempt to bring timeshare’s TAT in line with that paid by hotel guests. “The objective,” he said, “is to have equitable tax treatment to ensure that the people of Hawaii have adequate funds to support the impacts of visitors to the Islands.” In this sense, he believes the timeshare visitor and the hotel guest should be treated the same.
But industry advocates point out that timeshare owners are already treated differently. Toy says timeshare units already pay more taxes than comparable hotel rooms. For example, as a fee simple owner of real property, a timeshare owner pays property tax. When a timeshare unit is rented out as a hotel room, GET is charged. These visitors are also charged exactly the same TAT as hotel guests. Moreover, timeshare owners do pay a transient accommodations tax, albeit somewhat lower, when they use their own units.
It’s this last tax that industry insiders find most galling. To the governor, it’s simply a matter of equity. “In terms of sharing roads, public parks and hiking trails with our own residents,” Abercrombie says, “it doesn’t matter whether a visitor is staying in a timeshare or a hotel room – the impacts on our Islands are the same.” But the industry turns the equity question on its head. Marriott’s Welch puts it this way: “I believe Hawaii is the only state where a TAT is applied to people sleeping in their own beds,” he says.
Timeshare advocate Imanaka says another problem is what an increased TAT would say to outside developers. “The increase itself would have sent a very negative message to the timeshare industry, to the timeshare owners who visit Hawaii, and to the investment community who invests capital here,” he says. “We’re a capital-poor state, meaning we need to import money in order to keep things running here. The last thing we want to do is send a negative message to the investment community saying, ‘Your dollars aren’t welcome here.’ And that’s my fear: that this will have a chilling effect on investment here in Hawaii.”
Instead of hiking taxes on timeshares, Imanaka says, the state should be nurturing the industry. “If we did, we would not have budget shortfalls as dramatic as we’re experiencing today. We would not have Furlough Fridays; we would not have to look at closing social services, having to tax retirees’ pension benefits, having to tax away Medicaid reimbursements, and the list goes on. Timeshare is the answer; it’s certainly not the problem. And what we have to do is embrace it, make sure the industry continues to thrive. Because we all benefit from that.”
How Timeshare Works
Photo: Courtesy of the Grand Waikikian at Hilton Hawaiian Village
For those of you who never sat through the slick presentation of a timeshare salesman, a review is in order: Timeshare is a form of fractional ownership in real property, typically a resort condominium. In most cases, developers sell this ownership in one-week increments, with the buyers getting rights to use the property for a specific week each year. That’s how some owners use their timeshare, coming back to the same resort at the same time every year. But there is often flexibility – the flexibility, for example, to trade weeks with another owner, either at your resort, or even in another state or country. Owners can also rent out their weeks or, in some cases, bank them for other years.
Upcoming Timeshare Projects
Average Hawaii Timeshare Weekly Maintenance Fee
High fees, which cover everything from property taxes to upkeep, are one of the biggest issues with timeshare owners.
In 2010, Hawaii timeshare units generated:
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