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2 • ARDA • 40 th Anniversary • 1969-20091201 15th Street NW, Suite 400Washington, D.C. 20005202/371-6700www.arda.org

ARDA’s 40 th Anniversary1969-2009Supplement to Developments

ARDA’s 40 th Anniversary • 1969-2009Contents3 Trivia Quiz4 Vacation Ownership: Through History’s Looking Glass10 Industry Timeline: Timeshare Milestones at a Glance12 Familiar Faces: Then & Now14 Did You Know?15 Notepage: Convention Memory Quotes16 Owner Talk: Timeshare — Why Then, Why Now18 Why Did Timeshare Succeed?18 Highlights of Legislative Issues20 Snapshot: Industry Experts Look Ahead2 • ARDA • 40 th Anniversary • 1969-2009

Vacation Ownership:Through History’sGlassby Christina WellsForty-six years ago, timesharing made itsglobal debut in the form of a 13-unit skiresort in the Swiss Alps. The developer’s namewas Hapimag, and this was the start of somethingbig. There are now 1,641 timeshare resorts inthe United States, generating timeshare salesof $10.6 billion (in 2007). Currently, 6.5million timeshare intervals are owned by 4.7million households in this country (based onmost recent research figures). The industry hascome a long way.

Industry Timeline:TimeshareMilestonesat a GlanceIn 1963, a developer named Hapimag built a13-unit resort in Graubuenden, Switzerland.This modest venture marked the inceptionof the vacation ownership industry. Today,timeshare stands as a $10.6 billion hospitalitygiant. The industry’s nearly half-centuryevolution includes a number of benchmarksand milestones.(Industry Trends, courtesy copyright of RCI University)1963 – The first timeshare resort is builtin Switzerland—Hapimag’s Sut BaselgiaResort, with 13 units1960s1968 – Interstate Land Sales FullDisclosure Act passed in Congress1969 – The American Land DevelopmentAssociation (ALDA) is establishedTrends: In the ‘70’s• Geographic expansion• Exchange companies are formed• Industry is unregulated• Secondary lenders begin to finance receivables• Tax-ruling in U.S. stalls right-to-use concept• Emphasis on sales, not vacation experience• Industry consists of small regional developers• In spite of difficulties, industry continuesto grow —number of resorts jumps from 45to 350, timeshare owners go from 10,000to 200,0001970 – The industry’s first national “land conference” takes place1974 – RCI, the world’s first exchange company, opensfor business; the first U.S. points-based program, VacationInternationale, Ltd., is established; the first national timesharespecificconference is launched1976 – ALDA creates the Resort Timesharing Council whichbecomes known as the National Timesharing Council; IntervalInternational opens for business1978 – Richard Ragatz publishes U.S. Resort Timeshare Purchasers:Who They Are, Why They Buy; Developments magazine is launched1970s10 • ARDA • 40 th Anniversary • 1969-2009

In 1983, Marriott Corporationwas attracted to thetimesharing business byAmerican Resorts Corporationand its Monarch at Sea PinesResort development at Sea Pines Plantation, Hilton Head Island,SC. Monarch Resort had won four national awards in 1982 and1983 for excellence in design, hospitality, and sales and marketing,which attracted Marriott’s attention and led them to purchaseAmerican Resorts. [Photo: Monarch at Sea Pinesreceiving the National Nurserymen’s Award presentedby Nancy Reagan in the Rose Garden at the WhiteHouse. Receiving the award are founders ofAmerican Resorts: Bob Miller, senior vice presidentand chief financial officer (left), and Ed McMullen,Sr., president.1981 – Floating-time concept is introduced; regulatorsestablish rescission, disclosure, and escrow requirements1982/83 – First purpose-built timeshare, American Resorts1982 – International Foundation for Timeshare begin1983 – The Model Timeshare Act is adopted; ARDA-Floridabegins to form1984 – Marriott becomes the first hospitality brand toenter the vacation ownership industry; fractional salesare introduced1985 – ALDA becomes American Resort & ResidentialDevelopment Association (ARRDA); ARRDA helps organizenew association, AMDETUR, for resort developers in Mexico;$1.0 billion in U.S. sales1987 – First research study on fractionals is published1988 – ARRDA Education Institute (AEI) is created,offering qualification and exam to award professionaldesignations; United States has approximately 1050resorts, Europe has 4501989 – ARRDA becomes American Resort DevelopmentAssociation (ARDA); Resales Model Act passedTrends: In the ‘80’s• Conversion of hundreds ofwholly owned condominiums• Regulators requireconsumer protection• Average size of resorts increases,scope of amenities increases1980s• Rise in purpose-built resorts• ARDA-Florida is formed• Fallout due to recession/image suffers• First urban timeshares – NewOrleans, San Francisco, London• “Floating time” offers new flexibility• First major hotelier entrant: Marriott• Fractionals emerge and firstfractional research studies published• Industry surpasses onemillion owners• Number of timeshare resortsincreases 400%• Number of timeshare ownersincreases 300%• Sales volume increases 500%1969-2009 • 40 th Anniversary • ARDA • 11

KnowDid Youg In 1963, the first vacationownership resort was builtin Switzerland.g ARDA’s first national conferencetook place in 1970, under theAmerican Land DevelopmentAssociation (ALDA) name.g New Orleans hosted one of thefirst urban timeshare resorts inthe United States.g Developments magazine waslaunched in 1978.g The 2008 Annual Conventionattracted nearly 4,000 attendees.g From 2001 through 2008, theARDA International Foundationhas invested over $3 million inindustry research.g Close to one quarter of all U.S.timeshare resorts are locatedin Florida.g Ninety-nine percent of timeshareresorts in the United States areaffiliated with Interval Internationalor Group RCI.g There are more than 1,600 timeshareresorts in the United States.g ARDA has close to 1,000corporate members.g There are 4.7 million ownerhouseholds in the United States.g There are 6.5 million timeshareintervals owned in the United States.g It is estimated that 8,000 newtimeshare units were built in 2008.g More than half a million timeshareintervals were sold in 2007.g The average sales price of aninterval unit in 2007 was $19, 216.g The industry is running at an80-percent occupancy rate.Exchange Company Contributions1976 – RCI goes international, opening an office in Mexico1977 – Interval has 60 affiliated resorts and 10,000 members;RCI automates exchange1980 – Interval has 80,000 members and 250 resorts;Interval installs an IBM computer; both Interval and RCIinstall toll-free lines1982 – RCI confirms more than 54,000 exchanges andhas 682 resort affiliates1984 – Interval hits the 500-member mark1985 – RCI has 1,000 resort affiliates1987 – RCI confirms 300,000 exchanges1989 – Interval goes international opening offices in Europe,Asia and Latin America; RCI has one million member families1994 – More than 1.6 million timeshare exchanges arerecorded; RCI celebrates 20 years of exchange1995 – RCI has two million member families1996 – Interval celebrates its 20th anniversary and services amembership approaching 700,0001999 – Interval welcomes its one-millionth member2000 – RCI launches its global points-based exchange system2002 – Approximately 851,500 timeshare intervals sold; RCIreaches the three-million member mark2003 – More than 3.3. million timeshare exchangesare recorded2005 – IAC/InterActiveCorp acquires Interval International2006 – At its 30th anniversary mark, Interval has amembership base of 1.8 million; Group RCI becomes part ofWyndham Worldwide2007 – RCI membership reaches nearly 3.7 million with 4,000resorts in 160 countries2009 – RCI celebrates its 35th Anniversary14 • ARDA • 40 th Anniversary • 1969-2009

ARDA Conventions:Thoughts and MemoriesEvery spring, thousands of vacation ownershipWe are not sure of the date of ourfirst American Land DevelopmentAssociation (ALDA) convention, butit preceded Gary Terry’s tenure. It washeld in a small hotel in Florida. Therewere fifty people and no exhibits.Barbara and David NelsonSea & Ski InternationalI attended my first timeshare conferenceat Bal Harbour in December 1980. I wasimpressed by the people I met at my firsttimeshare meeting–they were committedto a revolutionary way to deliver incrediblevacations. This network of people evolvedinto a professional family that has growntremendously over the past three decades.Deborah Linden, RRPIsland One ResortsWhat I remember most is how manyindustry leaders helped me when I gotinto this industry. Deb Linden, PerrySnyderman, Jeff Adler, Rip Gellein, BobMiller - these individuals spent timewith me and showed me their resortsand projects. I am very grateful to them.There is a willingness to be friends aswell as competitors in this industry.John Burlingame, RRPHyatt Vacation OwnershipMy journey with ARDA started at ALDA. Then,in 1980, as a young attorney, I was first giventhe opportunity to discuss issues in front ofapproximately 500 hundred attendees. It waswith ARDA I was able to begin interacting withthe early legal brain power of our industry—people like Stuart Bloch, Bill Ingersoll, HarryMcCoy, Perry Snyderman, and others. Andit was with ARDA I found a forum that hashelped me develop my legal career assistingresort clients with development of innovativeproducts, advancement of their ideas, andgrowth of their businesses. Over all my yearsand beyond, no other organization could have(nor has) offered as much to me personallyand to our resort industry.professionals gather for ARDA’s annual convention.Some of these individuals have been doing so fordecades. Here, members offer their thoughts on theevent and share favorite memories.I remember men smoking Marlboros.People have BlackBerrys in their handsnow, but back then, it was cigarettesand cigars. I was the second womanafter Christel DeHaan to serve onARDA’s Board. At my first meeting, thecigar smoke made me nauseous and Iexcused myself 45 minutes into it.Things have really changed.James J. ScavoWeinstock & Scavo, P.C.Merilee Elliott, IIDAMerilee Elliott InteriorsYou have a great time atconventions, whether you’re breakdancingat an Interval Internationalparty or just experiencing thecamaraderie that exists within theindustry. The ARDA convention ishomecoming week for me.Collin KnightFairmont Resort PropertiesThe conventions are invaluable forme, as someone in the industry but inHawaii, it is the once a year opportunityto get together and learn what everyoneelse is doing on the mainland. It isgreat to just catch up with friendsestablished over the years. Conventionsare a very important part of my ability,but also for companies’ ability togrow in the business.Mark WangHilton Grand Vacations Club1969-2009 • 40 th Anniversary • ARDA • 15

Snapshot:LIndustry Expertsook Aheadby Christina WellsSo, what lies ahead for the timeshareindustry? Research and expert forecasting offerthis consensus: challenges exist we are wellpositionedfor the future, as Baby Boomers hitretirement age. Demographics are on our side.The joy of ARDA’s 40th Anniversary is juxtaposed by the fear of the present globalrecession and lack of liquidity in the markets. This situation may negatively color manyshort-term views, but the long-term potential for vacation ownership is truly compelling.Findings from the 2007 Ypartership/Yankelovich Inc. National Leisure Travel Monitoralso validate timeshare’s growth potential. The study revealed that 70 percent of U.S.leisure travelers say they would like to go someplace they have never been before on theirnext vacation. In addition, 90% of leisure travelers in the United States say they are awareof the concept of timeshare, and 62% say that about vacation ownership. Both of thesenumbers have grown significantly since 2000. Six percent of active leisure travelers areinterested in owning some form of timeshare in the next two years.Another positive indicator is the fact that those who own, love the product.With satisfaction ratings near 85%, timeshare owners want more. According toPricewaterhouseCoopers Financial Performance 2008: A Survey of Timeshare &Vacation Ownership Companies, 32.6% of new timeshare sales in the United Stateswere to existing owners, illustrating that vacation ownership continues to provideaccommodations and services that meet the leisure traveler needs.“Our ability to maintain the success of the timeshare industry in today’s tough economywill hinge on strong consumer satisfaction and demand,” says Howard Nusbaum,ARDA president and CEO. “Vacation ownership, with its flexibility and spaciousaccommodations, continues to be a preferred travel choice for U.S. families.”The low penetration of qualified households in all markets indicates that 95% of themarketplace still has huge potential.“Market penetration is only about 4-6% in the United States, so it is still a growthindustry here,” says Edwin H. McMullen, Sr., senior partner, E.H McMullen &Associates/Destiny M. “We are at less than one-percent penetration worldwide. Thebrands will be in untapped markets first. Entrepreneurs have an opportunity in theboutique markets. Globally, it will be the hotel story that occurred here all over again.”