Strong, collaborative relationships key to success with new USVI timeshare law

With no new hotels built in the United States Virgin Islands (USVI) in more than 25 years, timeshare has been a strong driver of economic growth in the hospitality industry. New timeshare resorts have attracted tourists, provided jobs, and generated substantial tax revenue to the USVI government. 

The American Resort Development Association and the ARDA-Resort Owners’ Coalition (hereinafter collectively referred to as ARDA) realized more than 15 years ago that the USVI government was exploring ways to collect even more revenue from the timeshare industry. This began a collaborative effort to write a timeshare law in the USVI that would benefit the government, USVI residents, timeshare owners and developers, seeing that one did not exist at that time. ARDA knew it needed to develop and build meaningful relationships with USVI officials, legislators, and other interested parties to be a true participant in the process.

“As the trade association for the timeshare industry, we knew we had to get involved,” said Robert Clements, Vice President of Regulatory Affairs and General Counsel for ARDA. “Developing an open line of communication with the USVI government to ensure it understood our perspective and the important, positive economic impact that our industry has brought to the USVI was key. We also wanted to understand the government perspective so that we could work constructively with them on a timeshare law that met their needs but didn’t compromise the economic development and jobs that our industry provides.”

From the start of this collective process, ARDA and industry experts spent months strengthening relationships with the USVI Hotel and Tourism Association, the Caribbean Hotel and Tourism Association and the Caribbean Chambers of Commerce to build a broader coalition across the Caribbean to help with efforts in the USVI and beyond.

Additionally, ARDA built relationships with the then-Department of Tourism and head of the Office of the Tax Assessor, as there had been longstanding misconceptions about the taxes paid by timeshare owners, as well as issues with property tax billings for timeshare homeowners’ associations.

As a key part of the on-the-ground team and overall effort, ARDA also continued to employ local legal counsel to help in navigating and working with the USVI Governor’s office and the Legislature. The timeshare companies who helped over the years as part of this effort include Wyndham Destinations, Marriott Vacations Worldwide Corporation (including Sheraton Vacation  Villas, Westin Vacation Club), Interval International and RCI (now Panaroma).

Not all collaborative efforts are linear, however, which further emphasized the importance of having a strong relationship with leaders, as well as a robust and well-rounded team, which was strategically built at the outset of this effort.

Despite opposition from ARDA, the USVI ended up passing an Environmental/Infrastructure Impact Fee in 2017 that only applied to timeshare stays, essentially a timeshare occupancy tax. Once this law took effect, ARDA-ROC sued the USVI to have the tax declared unconstitutional, but this effort was ultimately unsuccessful in the federal appeals court.

Despite the court not finding the impact fee unconstitutional, ARDA, as well as its on-the-ground team and its member companies, continued to work with the Governor’s office and Legislature to eventually pass a timeshare law, which was signed into law. The revised timeshare law included benefits to the territory and the industry alike, such as non-judicial foreclosure, novel property tax and lien language, putting into place the first comprehensive timeshare law in the USVI to which all stakeholders agreed.

“This new law strikes an appropriate balance between supporting growth of the timeshare industry in the USVI and strong consumer protections,” said Clements. “Passing the new timeshare law in the USVI was a true collaboration between ARDA and its members, as well as with the territory and its leadership.”

This was a huge accomplishment for all those involved and set a needed framework in the USVI. The new timeshare law is a comprehensive, up-to-date law that addresses the creation, operations, marketing and sales, taxation and regulation of timeshares in the USVI. The law also provides for non-judicial foreclosure with opt-out provisions to protect owners. It contains new provisions regarding property taxes on timeshares and a novel approach to satisfying property liens on timeshare interests.

This was also achieved despite several major hurricanes that hit the USVI and then the COVID pandemic, which all hit the territory hard and delayed many of the efforts to pass this timeshare law. Through this, ARDA was able to build an even stronger relationship with the USVI, as it looked for ways to support its efforts to help and care for their residents.

ARDA has also worked with its members, Marriott Vacations Worldwide, Wyndham Destinations and Capital Vacations and their outside counsel, to prepare forms to use in the new non-judicial foreclosure process. The USVI Department of Licensing and Consumer Affairs, which has regulatory authority over non-judicial foreclosure under the new law, has reviewed and approved the forms.

To this day, ARDA continues to have an in-person presence in the USVI, with ARDA representatives and ARDA members traveling to the USVI to meet with local and territory officials to educate them on the timeshare industry.

In total, from the start of the effort until now, there have been approximately 50-75 trips made to the USVI for various purposes, and ARDA expects this to continue to grow as it ensures that the relationships built continue to be strong with open communication and dialogue between the parties.

“This effort highlights what can be achieved when we work together to accomplish legislative and regulatory goals,” said Clements. “Having the input and support of members – like Marriott Vacations Worldwide, Wyndham Destinations, Capital Vacations, Baker Hostetler, Philip Richardson, Foley & Lardner and others – is what made this effort a success.”

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