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ILX Resorts Incorporated was formed in 1986 to enter the Vacation Ownership Interest business. The Company generates revenue primarily from the sale and financing of Vacation Ownership Interests. The Company also generated revenue from the rental of its unused or unsold inventory of units at the ILX resorts and from the sale of food, beverages, or other services at such resorts. The company currently owns six resorts in Arizona, developable land adjacent to an existing resort in Arizona, one resort in Indiana, one resort in Colorado, 1,500 Vacation Ownership Interests in a resort in San Carlos, Mexico, and 1,326 (excluding 392 weeks purchased by Premiere Vacation Club but not yet annexed) Vacation Ownership Interests in a resort in Las Vegas, Nevada.
While some still equate the word "timeshare" with fraud or scams, the concept of owning a small piece of a resort or hotel and being able to travel there once or twice a year has become increasingly attractive and profitable. Timeshare or flexible-stay vacation ownerships became big business by the late 1990s and have grown into a legitimate part of the billion-dollar hospitality industry. ILX Resorts Incorporated, based in Phoenix, Arizona, sells timeshares, operates resorts, and finances timeshare opportunities, throughout the United States and in Mexico. ILX has properties in Arizona, Colorado, Indiana, Nevada, and Mexico.
Timeshare Experiments: 1986-94
ILX Resorts was founded in 1986 in Phoenix, Arizona, by Joseph Martori. Martori established the company to sell timeshare or flexible-time vacation ownerships at resorts and hotels in the western United States. Martori, a director and CEO of the company, had worked for the Brown & Bain law firm in corporate real estate, and had been a senior partner at Martori, Meyer, Hendricks & Victor, P.A. He attended New York University, where he received both a bachelor's degree and an M.B.A. in finance. He then received his law degree from Notre Dame University in South Bend, Indiana, which would figure in the future of ILX.
ILX went public in 1987 and had a small offering of $2 million in shares in 1988. ILX began selling timeshare interests to a variety of upscale properties and soon realized that actually owning and operating its own resorts might provide additional benefits. The first ILX resort was acquired in Estes Park, Colorado, tucked among the Rocky Mountains. In 1989 the company bought the Los Abrigados Resort in Oak Creek, Arizona, in the beautiful Sedona region. Sedona would figure prominently in ILX's expansion, and prove to be one of the fastest growing travel destinations in the United States. By 1991 ILX was bringing in revenues of $6.1 million for the year; the firm was determined to extend its empire through both increased timeshare opportunities as well as owning and operating its own resorts. By the end of 1993 ILX had nine full-service resorts offering vacation ownership interests in Arizona and its neighboring states.
In 1995 the company made several pivotal moves, which included the acquisition of a historic lodge in Payson, Arizona, called Kohl's Ranch and the implementation of a new concept called Varsity Clubs of America. The Varsity Clubs were timeshares available in upscale, full-service accommodations located close to major colleges and universities. The first Varsity Club was in South Bend, Indiana, near Notre Dame University where Martori had received his law degree. The Club provided temporary housing to visiting alumni and parents of students for university events such as reunions and sports games. Accommodations were one- or two-bedroom suites with kitchenettes as well as a restaurant, lounge, fitness center, gift shop, pool, and even a playground. Also in 1995 was the arrival of Martori's son, Joseph II, who began working at ILX.
Major Expansion: 1996-99
By 1996 the timeshare concept had taken off; major hotel and resort chains had entered the timeshare market and established its legitimacy. Sales of flexible-stay vacation shares grew tremendously throughout 1996 and into the following year. ILX's sales increased from 1996's $31.6 million to $36.4 million in 1997. Industrywide revenues boomed, with record revenues of some $88 billion, according to Hotel & Motel Management magazine. The addition of such hospitality giants as Hyatt, Marriott, Hilton, Westin, and Four Seasons hotel chains did add stability to the timeshare market, yet also created major competition for a small company like ILX. In 1997 ILX acquired the development rights to the Roadhouse Resort in the White Mountains of Arizona and began selling timeshare opportunities in the popular property, which featured horseback riding and a wide range of outdoor activities.
While 1998 started out promising with the opening of ILX's second Varsity Club in Tucson, near the University of Arizona's main campus, and the inception of its new Premiere Vacation Club timeshare program, the end of the year heralded an end to the solid revenues and growth in the lodging market. ILX moved from the NASDAQ small-cap to the American Stock Exchange in February 1998 with a public offering in February. Chairman and CEO Martori told Steve Bergsman of Hotel & Motel Management in June 1998, "The American Stock Exchange will provide a more efficient market for ILX stock; the AMEX specialist system caters well to growing industries such as vacation ownership. We believe the AMEX will provide our stock with greater visibility and improved share liquidity." Soon after its offering, ILX bought a majority stake in the Sedona-based Timeshare Resale Brokers Inc., which built and operated timeshare properties in the western states. With the acquisition, ILX hoped to expand its vacation ownerships into resorts throughout the United States.
Yet poor sales near the end of 1998 forced ILX to reconsider its projected expansion. The firm began buying back its shares at depressed pricing (some two-thirds lower than its high) and managed to end the year with sales of $34.7 million and a profit of only $100,000. Timeshare sales remained stagnant in early 1999 when ILX's subsidiary Timeshare Resale Brokers launched an online listing service through a partnership with the Association of Timeshare Retail Agents. The new site listed available timeshares, auctions, and information related to the field. The market perked up a bit during the remainder of 1999 and ILX finished the year with sales topping $37 million and a profit of $700,000.
The New Century: 2000s
In 2000 ILX opened a sales office in Phoenix, which served as its fifth sales office in the United States. By the middle of the year ILX's sales had topped previous figures for the first and second quarters and the company leased a 44-acre parcel of land off the Las Vegas strip with future plans for development. The Las Vegas parcel, at the corner of Tropicana and Paradise Road, had what ILX termed the "potential to be developed into a first-class mixed-use development," as quoted in Phoenix Business Journal in September 2000. Although the land was currently the site of the Las Vegas International Golf Center, ILX had secured the lease rights for the next 50 years if the company could find financing for its plans. ILX also leased a parcel adjacent to its Los Abrigados Resort in Sedona, Arizona, occupied by the Canyon Portal Motel. ILX planned to renovate the motel and create a sister property called Los Abrigados Lodge.
By 2001 the Sedona area was attracting much attention from developers, including ILX. The company already had its upscale Los Abrigados Resort & Spa, new plans for the soon-to-be Los Abrigados Lodge, as well as two additional purchases. The first was a $1 million parcel next to the Resort to open a sales office; the second was the $5.2 million purchase of the Bell Rock Inn, located in Oak Creek, just six miles from ILX's Los Abrigados properties.
On the Vegas beat, ILX continued with its plans for the $95 million parcel off the strip, envisioning a Varsity Club like those operated in South Bend and Tucson. The Varsity Club concept had proved quite successful, and the third would be close to the University of Nevada at Las Vegas. In addition, ILX gained access to Vegas by acquiring more than 600 timeshare intervals at the pricey Carriage House hotel in the summer of 2001. The 155-suite Carriage House was just off the Las Vegas strip and across from the flashy new Aladdin Hotel & Casino.
ILX's much anticipated Sea of Cortez resort in San Carlos, Sonora, Mexico, opened its doors by mid-2001. The company celebrated the property's grand opening by offering guests complementary scuba diving lessons. ILX pursued further expansion in Mexico by partnering with Consorcio Asag and Grupo Casa to develop additional timeshare opportunities in the San Carlos area.
By 2003 ILX was on a roll. The firm's stock had been touted by Dow Jones as one of its top ten performers for 2002 and ILX's Sedona resorts were nestled in what USA Today called "the most beautiful place in America." ILX operated four resorts in the Sedona area's stunning landscape, and each was highly rated by its guests. In addition, ILX opened a sales office on the top floor of the luxurious Carriage House just off the Las Vegas strip, declared the company's first-ever dividend for common stockholders, and ended the year with its highest revenues yet of $65.4 million, more than 10 percent better than the previous year's figure. Each of ILX's three business segments did well in 2003, especially new sales in vacation ownership interests. According to a company profile of ILX in the Wall Street Transcript (April 2002), Martori had mentioned that only 3 percent of American families owned timeshares--which left an untapped market of the remaining 97 percent. Martori and ILX intended to pursue that market and make ILX a major player in the flexible vacation ownership industry.
Principal Subsidiaries: Timeshare Resale Brokers Inc.; VCA Nevada, Inc.; Varsity Clubs of America, Inc.
Principal Competitors: Cendant Corporation; Four Seasons Hotels & Resorts; Hilton Hotels Corporation; Hyatt Corporation; Marriott Ownership Resorts; Silverleaf Resorts, Inc.; Starwood Hotels & Resorts Worldwide; Walt Disney Company.