Removed From Timesharing, Jon DeHaan Stays Busy In Other Ways
By Rosalie E. Leposky
He has been out of the timeshare industry for five years, but Jon Holden DeHaan remains an industry icon.
More than two decades ago, DeHaan and like minded businessmen helped to secure the nascent industry's future by inventing a wrinkle it desperately needed: vacation exchange.
Ironically, their stroke of genius occurred almost by accident. Under the corporate name of Resort Condominiums International, Inc., they began in 1974 to offer purchasers of whole-ownership vacation condominiums a way to swap apartments. When the condo boom went bust in the mid-1970s, many developers of these whole-ownership projects turned to timesharing to liquidate their unsold inventory. RCI's exchange concept adapted conveniently to timesharing, making the new product type flexible enough to gain consumer acceptance, and giving the DeHaans' fledgling business an unanticipated and fortuitous shot in the arm.
Jon Holden DeHaan
From an exchange system on index cards , RCI has grown to become the world's largest vacation-exchange company. According to corporate statistics posted on RCI's Internet World Wide Web site, the firm now employs 4,200 people at 68 offices in 33 countries. Last year RCI arranged more than 1.5 million vacation exchanges to resort destinations in 81 countries -- but Jon hasn't been part of that growth since 1991, when Christel , his former wife, bought him out after a judge awarded control of the company to her in the wake of their 1989 divorce. He received about $72 million (after taxes) for his share of RCI. The sale price is based on RCI’s 1987 financial statement.
Jon DeHaan now directs his creative energy to managing his investments and the philanthropic activities of the Jon DeHaan Foundation, which funds the cardiovascular research of Dr. Robert Schwartz in a joint venture with the Mayo Clinic Foundation. Since open-heart surgery in 1984, DeHaan has become a non-smoking, non-drinking vegetarian.
In the early 1990s, the Jon DeHaan Foundation also supported a variety of educational projects in Indianapolis-area primary and secondary private schools. One such program endeavored to increase computer use in English and math classes in grades one through six. Three-year results showed an increase in reading comprehension and a 20 percent increase in students’ Iowa math-test scores. In 1993-1994, DeHaan funded a project with WRTV (Channel 6), the ABC-TV station in Indianapolis to elect and bestow a $1,000 honorarium upon the Indiana teacher of the week.
“Running a foundation is difficult,” says DeHaan. “I try to do the greatest amount of good with available resources. We distribute a couple of million dollars a year, mostly as long-time matching funds to projects that are run like a business.”
DeHaan now lives in Naples, Florida, an affluent community on the lower Gulf Coast. His signature “uniform” of dark blue business suits and white cotton shirts hangs in his closet. “I still wear them occasionally, with my black, low-cut Nike sneakers,” says DeHaan. “Everyone in Naples dresses casually, and I never like to take myself too seriously.”
On December 10, 1994, DeHaan married Deborah Crawford, who had worked as a legal writer for the Norfolk, Virginia law firm used by DeHaan’s older brother, Martin. Jon and Debbie share their beachfront home with Dreyfus, a six-year-old golden retriever.
Jon and Debbie DeHaan
As head of RCI, DeHaan seldom took a vacation. “Now,” he says, “I have time to spend with my adopted sons, Keith, 34, and Tim, 33 [Christel’s children from a previous marriage], and their four children, who range in age from 18 months to seven years and my daughter Kirsten is a college freshman.” Tim works for RCI in Indianapolis; Keith is not part of the timeshare industry.
Learning the Business
Jon DeHaan’s Dutch grandfather settled in Holland, Michigan, in the late 1870s. In 1930 DeHaan’s maternal grandfather, William R. Holden, founded Holden Red Stamps. In 1966 Curt Carlson, founder of Gold Bond Stamp Co., the original core business of the Carlson Companies, Inc. (parent company of Radisson Hotels Corporation), purchased Holden Red Stamps. Later, DeHaan used funds from his Holden Red Stamp inheritance to capitalize RCI. Jon’s parents, attorney William DeHaan and his wife, Kathleen, were living in Ypsilanti, Michigan, when Jon was born in 1940. He has two older brothers. William, 66, a retired General Motors executive, lives on Marco Island, Florida. Martin, 60, owns Creative Inns in Virginia Beach.
In 1950, the DeHaan family moved to Birmingham, Michigan. In 1963, Jon received a Bachelor of Arts degree with honors in economics from Claremont Men's College (now called Claremont McKenna College) in Claremont, California. Recently he helped the college establish a five-year Masters in Business Administration program.
In 1966 he earned a Masters in Business Administration degree from Indiana University in Bloomington. Then he spent three years completing class work for a Ph.D. degree from the Wharton School of the University of Pennsylvania in Philadelphia, but he left in 1969 without completing his dissertation to work for a Los Angeles firm, Economic Research Associates (ERA). The firm specialized in recreational feasibility studies. “It prepared nine different studies for Walt Disney World,” says DeHaan. At ERA, DeHaan developed an interest in the recreational-camping business.
After several months, DeHaan left ERA to help his brother Martin create the first licensed recreational campground for Holiday Inns Travel Park, a subsidiary of Holiday Inns. Several months after that, he left Holiday Inns to create and direct a system of nationally franchised campgrounds for a joint venture between Brynmawr Corporation and Ramada Inns. He left that post when Brynmawr, unhappy at the unexpectedly high cost of corporate campgrounds, decided to stop planned expansion.
At the beginning of 1971, DeHaan used his knowledge of proprietary campgrounds to help Chase Continental Corporation develop additional resorts in Maryland and Virginia. In 1971, while working for Chase, he helped a committee of American Land Development Association (ALDA) members form Camp Coast To Coast, an exchange program for owners of recreational-vehicle campground plots. Participants in this effort included attorney and accountant Denny Brown and Martin Price of Yogi Bear Jellystone Campgrounds, based in Baltimore, Maryland. “Denny and I affiliated the first six campgrounds,” DeHaan recalls. Later ALDA sold Camp Coast To Coast to Denny Brown.
During 1969 and 1970, falling campground sales had paralleled the declining stock market. “Twenty-five years ago the campground product sold year-round use for an average price of $3,000, ” says DeHaan. “For the campground industry to succeed, we needed to revive campground sales and sell exchange memberships to camper owners. For our owners we linked the natural appeal of travel and camping in different locations." Starting in 1970, DeHaan volunteered hundreds of hours of his time to ALDA to help establish Camp Coast to Coast. “Campground developers needed a way for owners to exchange between proprietary campgrounds,” he says.
“I brought to the committee my systems knowledge -- how to make reservations, and most importantly how to do exchanges. We had to work hard to create the concept and we needed the right mix of sites, locations and people.” Each campground paid a developer fee to join Camp Coast To Coast and sold Coast to Coast camper memberships. Its camper members paid a $1-a-night reservation fee.
Then a Texas oil man approached Chase Continental Corporation to develop the west Texas resort community of Point Venture, west of Austin on Lake Travis. “Bob Motter, president of Chase Continental, was responsible for the condominiums and I worked on developing the campground,” DeHaan says. “Deteriorating Arab/American oil relations in 1972 disrupted development.
“In 1973 we had an option to purchase the Sandy Pines development 90 miles east of Dallas. “We made the purchase and six weeks later we funded our marketing program. We were ready to release a mailing just in time for the energy embargo. People were afraid they would not have enough gas or be able to acquire enough to drive out to see the project and still drive to work on Monday. Crude-oil barrel prices and interest rates rose. Gasoline was rationed and the currency was devalued, causing all developers severe problems.”
After six months in Texas, DeHaan left “to work for a campground near the dusty overgrown farming community of Indianapolis, Indiana, where I had friends from graduate school.” He continued to consult in Texas, but lived in Indianapolis. RCI was incorporated first in Virginia, and later in Indiana.
Genesis of an Idea
RCI's roots began in early 1973 in discussions among seven ALDA members: Lewis Berry, Denny Brown, Jon DeHaan, George Donovan, Don Harding, George Krusz, and Martin Price. They wanted to organize a reciprocal exchange program for condominium owners, as a sister program to Camp Coast to Coast. Following on the success of Camp Coast to Coast, two years later Gary Terry, founder of ALDA, and Denny Brown contacted him to develop a condominium exchange program. “RCI evolved as an idea,” says DeHaan. “We were all heavily involved with ALDA and concerned with the current vicissitudes of the economy.”
DeHaan stresses a critical concept -- RCI was created as a sales tool for ALDA’s developer members. “Almost immediately, we realized that we could not independently sell RCI membership,” he recalls. “Condominium sales and RCI membership had to be done together. Several ALDA members chipped in money and enrolled their resorts to start RCI. Our initial capitalization was $7,500.”
The first ALDA members resorts to affiliate with RCI were Blue Heron in Union, Washington; two Fairfield Communities -- Fairfield Bay in Arkansas and Fairfield Glade in Tennessee; Sugar Springs in Michigan; and Wildflower in Wisconsin." A couple of Spanish resorts also were early RCI members.”
The mechanics of RCI’s early systems were modeled on Camp Coast to Coast. “Same season trades were simple -- high season for high season, swing season for swing, and low season for low season. RCI also adopted Camp Coast to Coast’s $1 a night exchange fee,” he says.
In April of 1974, RCI first office opened in Indianapolis’s Park Fletcher office park. The first three RCI mailings to the condominium industry were done from the DeHaan family’s dining-room table because DeHaan needed additional work space and extra help stuffing envelopes . “Since we could not hire a mailing company, we hired neighborhood children for $1 an hour to stuff and stamp envelopes,” he says “The first exchanges January of 1975 were kept in RCI office in a Pendaflex box.”
Almost simultaneously several U.S. developers tried to create and actually sold a variety of products we would now call timeshare resorts. Names that often appear in lists of the first successful timeshare developers list include Carl G. Berry of Innisfree Corporation, developer of Brockway Springs in Lake Tahoe, California; Hillel A. Meyers in Florida and Las Vegas, Nevada; Jim Nighswonger at Shawnee Villages in Shawnee-on-Delaware, Pennsylvania; and Keith W. Trowbridge in Florida.
An early critical event for RCI was a February 1974 conference at Broadmore, Colorado, where DeHaan learned about resort timesharing from speakers representing two pioneering timeshare firms: David Irmer and Carl Berry of Innisfree Corporation and Bob Burns and Bob Riggenberg of Vacation Internationale, Ltd. Burns and Riggenberg originated the concept of point-based timesharing in the U.S., selling a product that gives owners access to units of multiple size at any time of year in participating resorts based on expenditures of points. In the 1980s,” DeHaan recalls, “we learned Takaruska had similar programs in Japan in the mid-1970s.”
The condominium industry’s focus changed from whole-ownership condominiums to timeshare. The U.S. Securities & Exchange Commission’s sales restrictions said that condominium sales based on rental projections or tax benefits had to be considered a security. “Anxious to create additional sales and new members , RCI knew new sales were necessary to register additional owners. A whole-ownership condominium offered RCI one member, while timesharing the same unit provided RCI with 50 owners. Timesharing also helped developers sell their unsold inventory.”
Berry, now a partner in Eichner Enterprises in New York City, says timeshare exchange probably was mentioned first at a fall meeting in 1974 at Hyatt's O'Hare Airport Hotel. “We were anxious to develop interest in timesharing,” he says. “We wanted a large audience, so Innisfree Corporation asked a reluctant ALDA and Real Estate Research Corporation, a national consulting firm interested in Lake Tahoe, to co-sponsor the meeting.”
At that time, Innisfree Corporation was a 50-50 joint venture owned by Hyatt Corporation and the company’s officers: David Irmer, president, and Carl G. Berry and Paul Gray, vice presidents. “In 1969 Paul and I founded Creative Leisure for the express purpose to do what is now called timesharing,” Berry says, “but Creative Leisure was unable to market its product. In the summer of 1972, we joined Hyatt to develop a titled timesharing product. Brockway Springs, with 75 waterfront condominiums, was introduced in the spring of 1973. Five of the units were sold as 25 two-week interests, and 70 were sold as whole-owner condominiums.”
Berry organized the fall 1974 meeting, selected the speakers, and chaired most of the sessions. “About 75 people attended the session at which Jon DeHaan asked to speak,” Berry recalls. “DeHaan was unknown to me. He said he did not have a question, but a comment: ‘My exchange firm, Resort Condominiums International, will dedicate itself to offer exchanges for timeshare projects.’ Then DeHaan sat down. Everyone looked at him as if he'd spoken in a foreign language. No one knew what he said or meant.”
At the fall 1975 ALDA land developers meeting held at the Royal Orleans Hotel in New Orleans, Innisfree sponsored a timesharing hospitality room." Our room was next to DeHaan's,” says Berry. “Only Carl Burlingame, Jon DeHaan, and Gary Terry visited me.”
DeHaan remembers seeing weekly timeshare sales reports at that time with the average price of a unit-week in the $3,000 range, showing the industry’s potential significance. “Carl Burlingame and I sat in my room sharing a bottle of good scotch,” he says. “About halfway through the bottle we realized that, in the current economy, Planned Unit Developments and other large land developments would not recover and campground ownership wasn't hopeful. Carl and I discussed the reasons for and against timesharing. We felt ALDA was not in tune. We left almost immediately to find Gary Terry at one of the meeting’s cocktail parties. We admitted to drinking too much scotch, but our analysis made sense -- ALDA would have to start holding meetings featuring timeshare, and would have to form a resort timesharing council and work to help develop regulatory legislation, or ALDA would be left at the starting line. Over the next two years I helped get approximately 70 developers interested in timesharing and to join ALDA’s Resort Timesharing Council (RTC). When I enrolled new members, I emphasized that the condominium industry needed timesharing to survive. Further, without consumer legislation, the timesharing industry would fail, and so would RCI.
DeHaan also spoke at meetings that Mario F. Rodriguez and Thomas J. Davis Jr. organized to discuss timeshare law, marketing, and sales. “Mario was one of the first developers I signed up for ALDA and RCI,” DeHaan says. Rodriguez later established a competing exchange company, Interval International.
“Jon always championed industry regulation and consumer protection,” says Rodriguez, who is now president of Resort Advisors International, Inc., a consulting firm based in Miami, Florida. “I've always admired Jon’s business acumen and intelligence. Until the day of his departure, he was involved in every aspect of RCI.”
From 1974 to May 1989, DeHaan served as RCI’s chief executive officer, president, and majority stockholder. RCI sales increased 10,000 percent, from $1 million in 1979 to $100 million in 1989. In 16 years, RCI’s original $50,000 capitalization increased 2,700 times to $135 million . “RCI’s phenomenal success was the result of a team effort, including the efforts of the original organizers, supportive developers, and a talented management team.”
DeHaan participated in organizing the Resort Timeshare Council (RTC) in 1976, and in the mid-1980s effort of the American Resort & Residential Development Association (ARRDA) to secure passage of timesharing legislation acceptable to the industry in 31 states and many foreign countries.
On May 1, 1984, DeHaan shared the National Timesharing Council’s first Timesharing Professional of the Year Award with Edwin H. McMullen, Sr.
Watching From the Sidelines
Since leaving RCI in 1991, Jon DeHaan has stayed informed about and interested in the industry he help to create. He sees the exchange companies’ home pages on the Internet’s World Wide Web solving a chronic problem -- making last-minute use of developer-owned space for exchange.
“Resorts and exchange companies would have to cooperate,” he says. “Developer-owned space less than 30 days out is generally rented by the resort or goes unused. By making such space available for exchange through the World Wide Web, members would be able to obtain an immediate exchange, the resort facility would be used, and the resort’s marketing and sales staff would gain a prospective customer.”
The future of the timesharing industry, DeHaan feels, is in hospitality brand-name recognition. “The exchange firms should promote consumer brand-name recognition through the web and, in the years to come, through interactive television,” he recommends.
Rosalie E. Leposky is managing partner of Ampersand Communications, a news-features syndicate based in Miami, Florida.
© Copyright 1996 Ampersand Communications
All Rights Reserved
Published in The Resort Trades, October 1996.