Timeshare trials and tribulations
New Jersey’s vacation home sharing culture looks to the north for salvation
When New Jersey voters go to the polls on Nov. 3, they will be asked — among other things — to approve the licensing of two new casinos in northern New Jersey. The outlook of the state’s timeshare industry may also hinge on the outcome.
If the voters approve, an area of the state previously untouched by timeshare development will become ripe for it. The Meadowlands and Jersey City have been mentioned as possible locations. Adding to their appeal, timeshare resorts near those casinos would offer owners and guests easy access to New York City.
Moreover, a portion of the new North Jersey casinos’ revenues may be allocated to aid Atlantic City’s struggling economy and casino business. Casinos in neighboring Pennsylvania, New York and Delaware began siphoning off Atlantic City’s clientele roughly a decade ago and the city’s casino revenues dipped from $5.2 billion in 2006 to $2.56 billion in 2015, according to the state’s Division of Gaming Enforcement.
The measure has some powerful critics, beginning with the state’s governor, former Republican presidential candidate Chris Christie. “Atlantic City is headed for a disaster, and north Jersey gaming is headed for defeat,” Christie said at a recent press conference.
Four of 12 Atlantic City casinos closed in 2014. And the city’s mayor, Don Guardian, told the Associated Press in March that he predicted Northern New Jersey casinos would drive three of the remaining eight out of business.
But proponents of the new gambling establishments claim such a revenue-sharing arrangement would help to make Atlantic City’s struggling casinos more viable, bring more visitors to a rejuvenated resort destination and ultimately make its timeshare resorts more attractive to potential owners and guests.
In recent years, the percentage of travelers to New Jersey who stayed in a timeshare has been mired in the single digits. Timeshares housed only 5 percent of travelers during their visit to Atlantic City, according to a 2013 survey by the Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism at Stockton University. In 2015, the same Institute found that in New Jersey, only 1 percent of travelers stayed in a timeshare.
Vincas Vyzas, a Kearney, New Jersey, attorney and real estate broker with expertise in timeshare law, said a positive referendum outcome could help improve the timeshare development climate in the Atlantic City area.
“In the past, property values were so high it didn’t make sense,” he noted. “Now they are low enough for developers to take chances. It’s speculative to a certain extent, but out of misfortune comes opportunities, and developers can learn from past mistakes.”
Vyzas believes that if the referendum passes, it will lead to the development of four new mega-resort complexes with extensive entertainment, recreational and shopping amenities in Atlantic City, the Meadowlands, Jersey City and Camden — across the Delaware River from Philadelphia.
“Each of these complexes would represent an investment of about $100 million,” Vyzas said. “Each would have about 350 to 400 units, with roughly a 50-50 mix between hotel and timeshare occupancy. For each complex, lodging alone would generate about $30 million annually in sales volume, and entertainment another $15 million.”
Today, he said, multi-room lodgings are hard to find at an affordable rate close to Manhattan. The timeshare component of the two North Jersey projects would provide such accommodations at far less cost than a hotel or timeshare in New York City, even considering the cost of a ferry or train ride to and from the city.
“We need to market New Jersey from a state perspective,” Vyzas said. Most New Jersey timeshare resorts promote their proximity to the seashore and gambling, but the state’s swimming season is limited and many people want other vacation activities.
Proximity to New York and Philadelphia would make these new complexes easily accessible for day trips to museums, parks, sporting events, concerts and and the theater.
In New Jersey itself, attractions include Cape May’s historic Victorian mansions, the Thomas Edison Museum in Menlo Park, Princeton University’s picturesque campus and wildlife refuges. New Jersey also boasts mountains and lakes, numerous golf courses and the scenic farmland that earned it the nickname Garden State.
This rosy scenario is by no means guaranteed. The voters may not approve, and even if they do, some North Jersey interests oppose diversion of the new casinos’ revenues to aid Atlantic City. “A lot of maneuvering is going on between the governor’s office, Atlantic City and prospective 2017 gubernatorial candidates as to whether the revenues from [the North Jersey casinos] will be used to support casinos in Atlantic City,” Vyzas said.
Among those opposing the diversion is Andrew Mulvihill, the chief executive officer of Crystal Springs Resort Real Estate in Vernon, New Jersey, in the state’s far northwest corner.
“I don’t believe the proliferation of gaming into Northern New Jersey will have any impact on increasing the number of timesharing offerings in New Jersey,” Mulvihill told TRD. “The main players are promoting locations next to Manhattan in very urban settings that are more industrial than commercial.”
A checkered past
With two exceptions, New Jersey’s timeshare resorts are clustered in the Atlantic City area.
In the city itself are Wyndham Skyline Tower and two of FantaSea Resorts’ three timeshare properties, Flagship Resort and Atlantic Palace. The third FantaSea property, La Sammana, is located to the north across Absecon Inlet in Brigantine.
Nearby are the Brigantine Beach Club, Legacy Vacation Club-Brigantine Beach, Avalon’s Beachcomber Resort, located about 35 miles south of the city, and Marriott’s Fairway Villas, located 10 miles north in Galloway. La Renaissance Suites, another timeshare property in Atlantic City, closed and filed for bankruptcy in November 2015.
The outliers are Crystal Springs and Legends Resort & Country Club, both in Vernon, New Jersey.
Crystal Springs is a successful multi- purpose golf resort, conference center and condominium community. From 1995 to 1999, the properties’ sponsor developed 45 timeshare units that it still manages. “We sold 3,000 interests,” Mulvihill said. “Today we have half that. People didn’t make the payments on their purchase financing, or stopped paying maintenance fees, or died.”
Hugh Hefner built Legends as the 800-room Great Gorge Playboy Club, which opened in 1972 and closed in the late 1980s. A succession of owners — including Mulvihill’s company for a brief period — attempted to repurpose it as a whole-ownership condo community, conference center and golf resort. Today, the property is owned by Hillel Meyers, a Florida-based timeshare developer who also owns a minority interest in Flagship Resort.
“Hillie sold timeshares for a couple of years,” Mulvihill recounted. “In the early 2000s, he shut down the sales operation and then shut down the hotel. He’s been trying to sell it for years. He still makes good on the timeshares by putting owners in his other resorts.”
“Today it’s like a flophouse,” Mulvihill added. “Some of our [Crystal Springs] cooks and housekeepers rent rooms at Legends on a long-term basis. You can’t check into that hotel overnight. It’s boarded up, except for one little side door where the tenants go in.”
Meyers did not return a request for comment.
Time for change
Vyzas said New Jersey’s timeshare industry also suffers from “a lack of consumer confidence.”
The New Jersey Real Estate Commission, a division of the New Jersey Department of Banking and Insurance, regulates timeshares through its Bureau of Subdivided Land and Sales Control. The agency focuses on whether timeshare salespeople are properly licensed. When asked for a list of New Jersey timeshare resorts, a spokesman said the agency did not track market information.
Vyzas has called for additional disclosure requirements for all types of common-interest real estate, including timeshares, condos and co-ops.
“Developers should be required to disclose their financial strength on an annual basis, showing their ability to complete their resorts and proposed amenities, renovate the units and deliver on their promises,” he said.
A demographic shift is also taking place. Initially, most of of the state’s timeshare developers emphasized their proximity to casinos, but the preferences of newer timeshare purchasers are changing. As millennials emerge to become a market force, their penchant for experiences over possessions and sharing over ownership fascinates sociologists and confounds traditional marketers.
Reflecting this shift, the American Resort Development Association reports a sharp contrast between timeshare owners who purchased more than three years ago and those who bought within the past three years.
Howard Nusbaum, the trade group’s president, said those who purchased more than three years ago have a median age of 51 years, compared with 39 years for those who bought timeshares more recently. The long-term owners have a median household income of $89,500, a tad less than the $94,800 for newer purchasers. And 34 percent of long-term owners have children at home while 51 percent of recent buyers do.
“Millennials are an ideal market for us,” Nusbaum said. “After all, we invented the shared economy.”