DESTINATION GAMING COMMUNITIES ARE UNTAPPED MARKETS FOR TIMESHARE

Source: RCI/Richard Ragatz

May 9, 1999
A study released late last year by RCI indicates that gaming destinations are ripe for timeshare development, and timeshare developers are finally beginning to take note. The survey, which was conducted among resort timeshare owners in Atlantic City, N.J., Las Vegas and Reno, Nev., detailed timeshare owners' home-resort characteristics, travel and gaming habits, as well as demographics.

Considering the locations of those surveyed, gaming was an important criterion when it came to purchasing timeshares. Over the next 10 years, respondents anticipate spending 19 more days in a gaming community where they purchased a timeshare than they would have if they had not purchased one. Gaming owners tend to have higher average incomes than all timeshare owners-$66,000 compared to $63,500.

Richard Ragatz, executive vice president of RCI Consulting, who directed the study, said that based on owner demographics and habits, gaming communities are ripe for new timeshare development. His observation also took into account that for 1997, 37 million visitors went to Orlando, which is the largest U.S. timeshare market, with 55 projects in the pipeline. Conversely, Las Vegas experienced 32 million visitors, but has only has eight projects underway.

Given this information, Ragatz said the gap between Orlando and Las Vegas underscores the untapped potential for gaming destinations.

A direct comparison shows there is one project per 670,000 visitors to Orlando, while there is just one project per 4 million visitors to Las Vegas. The comparison is even more striking when it is understood that in 1997, about $95 million in timeshares was sold in Las Vegas, compared to about $480 million in Orlando. Historically, about $500 million in timeshares has been sold in Las Vegas, compared to more than $2.5 billion in Orlando. Comparisons with Atlantic City and Reno are even more exaggerated, according to the study's authors.

Other findings examined expenditure patterns. Of those surveyed during their vacations in casino-gaming communities, timeshare owners spend a considerable amount of money, not only on gambling, but also on a variety of other goods and services. The average respondent spent $1,649 on their most recent timeshare vacation. Almost half, or $752, was spent on gambling. The remainder went toward other purchases.

Since the average visitor-party size was 3.3 persons and the average length of stay was eight nights, the average visitor party spends $206 per day while on a timeshare vacation and the average individual spends $62.

When concentrating on gambling expenditures,the average ranges from $623 among Atlantic City owners to $679 among Reno owners to $818 among Las Vegas owners. It is $473 among nongamblers, compared to $978 among gamblers. Researchers took the aforementioned expenditure patterns and applied them to a hypothetical timeshare resort in each of the three communities. In doing so, the authors assumed: a 200-unit project with 51 intervals per unit, meaning 10,200 total intervals; a year-round occupancy of 90 percent, which is about the national average for a well-managed timeshare project in a desirable location; and total sellout of the project.

In all three communities, this hypothetical project would annually generate about $16.2 million in casino expenditures and $6.2 million in gambling expenditures.