The timeshare model has 'died.' What that means for a Newport waterfront resort.
NEWPORT — One of the city’s six timeshare properties is jumping ship from the timeshare market and opting to serve as a traditional hotel instead.
Wellington Resort is a 51-suite timeshare condominium complex on Thames Street built around 1985. The new owners of the building, Providence-based Paolino Properties, have plans in the works to reconfigure the interior, removing the kitchens and living rooms from their two-bed two-bath units, to convert the building into a 152-room traditional hotel. The Planning Board voted to approve the project’s Development Plan Review in a 5-1 vote Monday night.
The way the project is being reconfigured drops the total occupancy from 306 people to 304 people. As a part of the project’s Development Plan, the applicant offered to pave a popular section of the Harbor Walk on its property to improve ADA accessibility.
Timeshares facing troubles
The Wellington Hotel Owners’ Association signed an agreement to terminate the property’s Timeshare Declaration, the contract which establishes the property as a timeshare, on April 29, 2021.
According to the termination agreement, the timeshare association had several reasons for abandoning the timeshare business, including the impact COVID-19 had on the travel and timeshare industries, the inability to sell timeshare interests for above a nominal liquidation value, and the fact that over 30% of the property’s timeshare owners defaulted on their maintenance fee payments. The latter issue left the company “without the financial resources necessary to properly maintain the Time Share Project,” and lacking willing owners to fund a full maintenance update to the property.
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“Timeshare is an industry that has, for all intents and purposes, died,” Real Estate Appraisal expert James Houle told the Planning Board at its Monday meeting. “A lot of people really don’t make use of the timeshare at all and, consequently, what ends up happening is most of these weeks are put back into pools and used as short-term rentals for longer periods and more as suites.”
Wellington Partners LLC, which is owned by Paolino Properties, purchased the property at the time of the termination agreement for $12,223,500, the exact amount the property was appraised for by an independent appraiser. However, plans for Wellington Partners LLC to take over the property might have begun earlier than April, as the appraiser’s January 2021 letter notes the company sent solicitation letters to timeshare owners offering $1,500 for any “flex week” timeshare interests in December 2020.
Can a timeshare become a hotel?
Those who came before the Planning Board on Monday night to testify in favor of Wellington Resorts argued that using the property as a traditional hotel would be more-or-less the same as how it currently operates. Houle testified that few resorts convert to hotels and will often rent out units on a nightly basis to make up for owners who don’t use their allotted weeks, similar to how a traditional hotel rents out rooms. Additionally, Attorney David Martland, who represents Wellington Partners LLC, said the timeshare condominium already advertises itself more like a regular hotel than a timeshare property anyway and has close to 100% occupancy in the summertime like every other hotel in Newport.
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The Planning Board’s approval of the application came with a few conditions, including establishing a few more electric vehicle parking spots (within the applicants’ capabilities) and providing a complimentary shuttle service to guests.
This article originally appeared on Newport Daily News: Wellington Resort, Newport, seeks to become hotel as timeshares end
