The state of Hawaii had been considering whether to bring in legislation to cover destination clubs, but the state auditor just issued a report recommending that no specific regulations should be introduced.
Hawaii Senate Bill No. 697 proposes to regulate destination clubs, but Marion Higa, the state auditor, released a report this week saying that there was no new evidence of consumer harm in the destination club industry.
The report did make reference to Tanner & Haley, the club that filed for bankruptcy in 2006, and noted the poor business practices that had let to its demise. Equally the report noted the "Best Practices" that the Destination Clubs Association has introduced.
There are eight destination clubs with properties in Hawaii with 80residences open or under development in the state and an estimated 15 Hawaii residents are club members.
Courts in Hawaii have already decided that timeshare law does not apply to destination clubs. This decision was partly based on destination club owners not being owners of the club properties.
The auditors report notes "The bill is an unnecessary regulatory measure that would add little consumer protection. We also conclude that destination clubs should not be regulated under the States Time Sharing Plan law since the provisions in the law are inappropriate for regulating their operations. The time share law was enacted to prevent rampant abuses early in the industry. These abuses are not characteristic of the operations of destination clubs."