AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 10, 1997

REGISTRATION NO. 333-19045
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
VISTANA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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FLORIDA 6552 59-3415620
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
8801 VISTANA CENTRE DRIVE
ORLANDO, FLORIDA 32821
(407) 239-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S EXECUTIVE OFFICES)
----------------
RAYMOND L. GELLEIN, JR.
CHAIRMAN OF THE BOARD
VISTANA, INC.
8801 VISTANA CENTRE DRIVE
ORLANDO, FLORIDA 32821
(407) 239-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

WITH COPIES TO:
MARSHALL E. EISENBERG, ESQ. PETER T. HEALY, ESQ.
NEAL, GERBER & EISENBERG O'MELVENY & MYERS LLP
TWO NORTH LASALLE STREET 275 BATTERY STREET
SUITE 2200 EMBARCADERO CENTER WEST
CHICAGO, ILLINOIS 60602 SAN FRANCISCO, CALIFORNIA 94111
(312) 269-8000 (415) 984-8833
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE(3)
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Common Stock, par value
$0.01 per share........ 6,382,500 shares $14 $89,355,000 $27,077

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(1) Includes 832,500 shares of Common Stock issuable upon exercise of the
Underwriters' over-allotment option.
(2)Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457.

(3) The registration fee was paid on December 31, 1996 in connection with the
initial filing of this Registration Statement.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED FEBRUARY 10, 1997

5,550,000 SHARES

LOGO

COMMON STOCK

Of the 5,550,000 shares of common stock, par value $0.01 per share ("Common
Stock"), of Vistana, Inc. (the "Company"), offered hereby (the "Offering"),
4,625,000 shares are being sold by the Company and 925,000 shares are being
sold by the Selling Shareholders named herein. The Company will not receive any
of the proceeds from the sale of shares of Common Stock by the Selling
Shareholders. Following the Offering, the Company's directors, executive
officers and certain of their affiliates will own beneficially approximately
70.5% (approximately 66.1% if the Underwriters' over-allotment option is
exercised in full and all shares of Common Stock subject thereto are sold
solely by the Selling Shareholders) of the outstanding shares of Common Stock.
See "Principal and Selling Shareholders." Prior to the Offering, there has been
no public market for the Common Stock of the Company. It is currently
anticipated that the initial public offering price will be between $12.00 and
$14.00 per share of Common Stock. See "Underwriting" for a discussion of
factors considered in determining the initial public offering price. The Common
Stock has been approved for quotation on the Nasdaq National Market, subject to
official notice of issuance, under the symbol "VSTN."

SEE "RISK FACTORS" COMMENCING ON PAGE 12 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK OFFERED HEREBY.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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Underwriting Discounts Proceeds to Proceeds to Selling
Price to Public and Commissions(1) Company(2) Shareholders
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Per Share............... $ $ $ $
Total(3)................ $ $ $ $
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(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.
(2) Before deducting expenses payable by the Company estimated at $2,150,000.
The Company has agreed to pay the expenses of the Selling Shareholders,
other than Underwriting Discounts and Commissions.
(3) The Company and the Selling Shareholders have collectively granted the
Underwriters a 30-day option to purchase up to an additional 832,500 shares
of Common Stock (which option is currently contemplated to be satisfied
solely by the Selling Shareholders). If the Underwriters exercise this
option in full (and all shares of Common Stock subject thereto are sold
solely by the Selling Shareholders), the Price to Public, Underwriting
Discounts and Commissions, Proceeds to Company and Proceeds to Selling
Shareholders will total $ , $ , $ and $ , respectively. See
"Principal and Selling Shareholders" and "Underwriting."

The shares of Common Stock are offered by the several Underwriters named
herein, when, as and if delivered and accepted by the Underwriters and subject
to their right to reject any order in whole or in part. It is expected that the
delivery of the certificates representing such shares of Common Stock will be
made against payment therefor at the office of Montgomery Securities on or
about , 1997.

-----------

Montgomery Securities Smith Barney Inc.

, 1997

Description of Inside Front Cover of Prospectus:
--------------------------------------------------

The inside front cover of the Prospectus consists of a three-page gatefold
containing various logos, photographs of the Company's existing resorts and
drawings of the Company's planned resorts. The photographs and drawings, which
are arrayed on the second and third pages of the gatefold, are arrayed against a
light blue wave-patterned background in which the words "Vistana, Inc.", or
portions thereof, are visible. The gatefold is more particularly described as
follows:

FIRST PAGE: The words "Vistana, Inc." are written across the top margin of
the first page. In the center of the page, eight logos are arrayed in three rows
- - the top two rows containing three logos each and the bottom row containing two
logos. The logos from left to right are as follows: (A) top row - (1) PROMUS
HOTEL CORPORATION (R.); (2) VISTANA RESORT; and (3) PROFESSIONAL GOLFERS'
ASSOCIATION OF AMERICA; (B) middle row - (1) EMBASSY VACATION RESORT (R.); (2)
VISTANA'S BEACH CLUB ON HUTCHINSON ISLAND; and (3) WORLD GOLF VILLAGE; and (C)
bottom row - (1) HAMPTON VACATION RESORT; and (2) OAK PLANTATION VILLAS BY
VISTANA. The following legend appears along the bottom margin of the page:

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON
STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, ON
THE OPEN MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

EMBASSY VACATION RESORT (R.), EMBASSY SUITES (R.), HAMPTON VACATION RESORT
(SM) HAMPTON INN (R.), HOMEWOOD VACATION RESORT (SM) AND HOMEWOOD SUITES
(SM) ARE TRADEMARKS AND SERVICE MARKS OF PROMUS HOTELS, INC. AND OTHER
WHOLLY-OWNED SUBSIDIARIES OF PROMUS HOTEL CORPORATION.

PGA(R.) IS A TRADEMARK OF THE PROFESSIONAL GOLFERS' ASSOCIATION OF AMERICA.

WORLD GOLF VILLAGE (SM) IS A SERVICE MARK OF WORLD GOLF VILLAGE, INC.

SECOND PAGE: The upper one-half of the second page contains three
photographs arrayed against a blue background and identified by a text box as
"VISTANA RESORT - Orlando, Florida." The photographs depict: (i) the entrance to
Vistana Resort with palm trees, flower beds and a fountain visible; (ii) an
exterior view of one of the buildings at the resort with a swimming pool in the
foreground; and (iii) an interior view of one of the units at the resort, which
shows the dining, living room and balcony areas. Under the photographs the words
"VISTANA RESORT" appear, separated by the Company's V-shaped dove logo. The
lower one-half of the second page contains a drawing arrayed against a pink
background and identified by a text box and logo as "EMBASSY VACATION RESORT
(R.) - Myrtle Beach, South Carolina." The drawing depicts an exterior view of a
four-story building with foliage in the foreground.

THIRD PAGE: The upper one-half of the third page contains two drawings
arrayed against a green background and identified by a text box as "VISTANA
RESORT AT WORLD GOLF VILLAGE - St. Augustine, Florida" and the World Golf
Village logo. The drawings depict (i) a bird's-eye view of the planned World
Golf Hall of Fame and (ii) a building under which is written: "VISTANA WGV, LTD.
AT WORLD GOLF VILLAGE, St. Johns County, Florida." The lower half of the page
contains a photograph of a modern-style building set against a yellow background
and identified by a text box as "Vistana, Inc. Corporate Headquarters - Orlando,
Florida."

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and the Combined Financial
Statements of Vistana, Inc. included elsewhere in this Prospectus. Except where
otherwise indicated, the information contained in this Prospectus (i) assumes
no exercise of the Underwriters' over-allotment option; (ii) assumes that any
outstanding options to purchase common stock, par value $0.01 per share
("Common Stock"), of Vistana, Inc. have not been exercised; (iii) gives effect
to the consummation of the Formation Transactions (as defined herein), which
will occur concurrently with the completion of the Offering (as defined
herein); and (iv) assumes Vacation Ownership Interests (as defined herein) are
presented on an annual, as opposed to an alternate-year, basis. See "--The
Resorts." Unless the context otherwise requires, the "Company" means Vistana,
Inc. and its consolidated subsidiaries following the consummation of the
Formation Transactions and includes its corporate and partnership predecessors
and partnerships in which the Company owns a controlling interest. Unless
otherwise indicated, all vacation ownership industry data contained herein is
derived from information prepared by the American Resort Development
Association ("ARDA"), the industry's principal trade association. This
Prospectus contains certain statements of a forward-looking nature relating to
future events or the future financial performance of the Company. Prospective
investors are cautioned that such statements are predictions only and that
actual events or results may differ materially. In evaluating such statements,
prospective investors should specifically consider the various factors
identified in this Prospectus, including the matters set forth under the
caption "Risk Factors," which could cause actual results to differ materially
from those indicated in such forward-looking statements.

THE COMPANY

Founded in 1980, the Company is a leading developer and operator of timeshare
resorts in the United States. The Company's principal operations consist of (i)
acquiring, developing and operating timeshare resorts, also known as vacation
ownership resorts; (ii) marketing and selling vacation ownership interests in
its resorts, which typically entitle the buyer to ownership of a fully-
furnished unit for a one-week period on either an annual or an alternate-year
basis ("Vacation Ownership Interests"); and (iii) providing financing for the
purchase of Vacation Ownership Interests at its resorts. The Company currently
operates three vacation ownership resorts in Florida with a total of 1,406
units, or 71,706 Vacation Ownership Interests, and is currently constructing a
fourth resort at World Golf Village, a destination golf resort and future home
of the World Golf Hall of Fame currently under development near St. Augustine,
Florida. In addition, the Company has entered into an exclusive joint venture
agreement with Promus Hotels, Inc. ("Promus"), a leading hotel company in the
United States, for the joint development and operation of vacation ownership
resorts in selected North American markets. The Company has also entered into a
letter of intent with The Professional Golfers' Association of America ("PGA of
America") for the development of golf-oriented vacation ownership resorts.

The Company opened the first vacation ownership resort in Orlando, Florida,
which has become one of the largest vacation ownership markets in the world.
During its 16-year history, the Company has sold in excess of $550 million of
Vacation Ownership Interests and has an ownership base of over 49,000 owners
residing in more than 100 countries. Raymond L. Gellein, Jr., the Chairman and
Co-Chief Executive Officer, and Jeffrey A. Adler, the President and Co-Chief
Executive Officer, have been employed by the Company since 1980 and 1983,
respectively. Under their direction, the Company has focused on creating a
values-driven business culture that emphasizes excellence and quality
relationships with its employees, customers and business partners. Management
believes that these philosophies have been instrumental to the Company's
success. Messrs. Gellein and Adler serve as the chairman of the Florida chapter
of ARDA and as a director of ARDA, respectively.

1,088 units developed in seven phases on a 135-acre landscaped complex
featuring swimming pools, tennis courts, restaurants and other recreational
amenities. In 1995 and 1996, Conde Nast Traveler magazine selected Vistana
Resort as a "Gold List" resort, the only vacation ownership resort to be
included as one of the top 500 resorts in the world. Similarly, the most recent
Zagat Survey of U.S. Hotels, Resorts & Spas ranked Vistana Resort as one of the
top resorts in Orlando, commenting that it contains the "most luxurious villas
in Orlando." Each of the Company's operating resorts is rated as a Gold Crown
resort by Resort Condominiums International ("RCI"), the operator of the
world's largest Vacation Ownership Interest exchange network, which was
recently acquired by HFS Incorporated. The Gold Crown distinction is reserved
for approximately the top 14% of the more than 3,000 vacation ownership resorts
in the RCI network.

The vacation ownership industry has experienced substantial growth since
1980. Annual worldwide vacation ownership sales have increased from
approximately $490 million in 1980 to approximately $4.76 billion in 1994 (the
latest period for which ARDA information is available), with approximately 75%
of such sales growth occurring since 1990. Based on other industry information,
the Company believes that vacation ownership sales exceeded $5.0 billion in
1995. Approximately 52% of all owners of Vacation Ownership Interests reside in
the United States. Still, less than 2% of all United States households own a
Vacation Ownership Interest. Approximately 41% of all Vacation Ownership
Interest buyers own more than one Vacation Ownership Interest. See "Business--
The Vacation Ownership Industry."

The Company's goal is to maintain and expand its position as a leading
developer and operator of vacation ownership resorts in the United States by
(i) continuing sales of Vacation Ownership Interests at the Company's two
Orlando-area resorts; (ii) acquiring, developing and selling additional
vacation ownership resorts; and (iii) improving operating margins by reducing
borrowing costs and reducing general and administrative expenses as a
percentage of revenues. In achieving this goal, the Company intends to adhere
to its core operating strategies of obtaining extensive access to qualified
buyers, promoting sales excellence and delivering memorable vacation
experiences to its owners and guests.

Continuing Sales at the Company's Orlando-Area Resorts. With over 36 million
visitors annually, Orlando is one of the most popular vacation destinations in
the United States. The Company intends to maintain its position as a leader in
the Orlando vacation ownership market by developing and selling an additional
451 units at Vistana Resort, representing an additional 23,001 Vacation
Ownership Interests. In addition, the Company plans to continue sales at Oak
Plantation Villas by Vistana, a 242-unit former apartment complex located in
the Orlando market, which the Company is converting in phases into a vacation
ownership resort and which is owned by a partnership in which the Company holds
an approximately 67% controlling ownership interest. As of December 31, 1996,
Oak Plantation Villas by Vistana had an unsold inventory of approximately
12,222 Vacation Ownership Interests.

Acquiring and Developing Additional Resorts. The Company intends to rely on
its operating knowledge and new strategic relationships to acquire and develop
additional vacation ownership resorts, including the following opportunities:

. Promus. The Company and Promus have entered into an exclusive five-year
agreement (the "Promus Agreement") to jointly acquire, develop, market
and operate vacation ownership resorts in North America under Promus'
Embassy Vacation Resort, Hampton Vacation Resort and Homewood Vacation
Resort brands. Under the Promus Agreement, the Company will be Promus'
exclusive joint venture partner for the acquisition, development and
operation of vacation ownership resorts in North America and will also
have the option of operating vacation ownership resorts on a franchise
basis. Promus has agreed that the Company will be the sole franchisee in
North America of the Hampton Vacation Resort and Homewood Vacation
Resort brands, and one of only two franchisees in North America of the
Embassy Vacation Resort brand. Subject to certain exceptions, the Promus
Agreement precludes the Company from acquiring or developing vacation
ownership resorts with any other multi-hotel brand.

Although the Company and Promus are evaluating new resort development
opportunities for the joint venture, no commitments have been made for a
specific development at this time. However, the parties have agreed to
franchise two of the Company's properties subject to the execution of
definitive franchise agreements: (i) Oak Plantation Villas by Vistana,
which is intended to become the first vacation ownership resort to operate
under the Hampton Vacation Resort brand; and (ii) a 550-unit resort in
Myrtle Beach, South Carolina, which the Company intends to develop on a
40-acre site (the first parcel of which was acquired by the Company in
December 1996) and to operate under the Embassy Vacation Resort brand (the
"Myrtle Beach Resort"). The Company believes it will benefit from Promus'
strong brand recognition, large customer base, marketing capabilities and
hospitality management expertise.

. World Golf Village. In the fall of 1996, the Company commenced
construction of the first 102-unit phase of a 408-unit vacation
ownership resort at World Golf Village. Constituting the centerpiece of
a planned community under development near St. Augustine, Florida, World
Golf Village is a destination resort which will contain the World Golf
Hall of Fame, a championship golf course, a golf academy, a hotel and
convention center, restaurants, retail facilities and other amenities.
The Company holds a 37.5% controlling ownership interest in a limited
partnership which has the exclusive rights to develop and market
Vacation Ownership Interests at World Golf Village. The Company believes
that World Golf Village and the golf industry in general represent
attractive opportunities for Company expansion and the development of
future vacation ownership resorts.

. PGA of America. Under a letter of intent with PGA of America, which
contemplates a long-term affiliation for the development of future
vacation ownership resorts, the Company intends to acquire 25 acres of
land adjacent to an existing 36-hole championship golf facility owned by
a subsidiary of PGA of America in Port St. Lucie, Florida, for the
development of the first PGA Vacation Resort by Vistana. The property,
located approximately 40 miles north of Palm Beach Gardens, Florida, is
planned to contain approximately 250 units, representing a total of
12,750 Vacation Ownership Interests. The Company believes that PGA of
America, through its approximately 20,000 golf professionals, will
provide strategic marketing opportunities for this resort and any future
PGA Vacation Resorts developed by the Company.

. Vistana Branded Resorts and Acquisition Opportunities. To capitalize on
the Vistana brand and reputation, the Company intends to seek other
vacation ownership resort development opportunities in selected vacation
markets where, among other things, it believes it can obtain effective
marketing access to potential customers. In addition, the Company from
time to time evaluates opportunities to acquire vacation ownership
assets and operating companies that may be integrated into the Company's
existing operations. However, the Company currently has no contracts or
capital commitments relating to any such acquisitions.

Each of the foregoing projects and agreements requires the Company to make
substantial capital commitments and is subject to various risks, including
risks related to availability of financing, construction and development
activities, and the Company's ability to execute its sales and marketing
strategies at new locations. See "Risk Factors." Over the next 12 months, the
Company anticipates spending approximately $51 million for acquisition,
expansion, conversion and construction activities with respect to the
identified projects. The Company anticipates funding these expenditures with a
portion of the net proceeds of the Offering, cash flow from operations and
through borrowings under its credit facilities.

The Company has historically provided financing for approximately 93% of its
customers, who are required to make a down payment of at least 10% of the
Vacation Ownership Interest's sales price and generally pay the balance of the
sales price over a period of seven years. The Company typically borrows from
third-party lending institutions in order to finance its loans to Vacation
Ownership Interest buyers. As of December 31, 1996, the

Company had a portfolio of approximately 20,400 loans to customers totaling
approximately $116.0 million, with an average contractual yield of 14.4% per
annum (compared to the Company's weighted average cost of funds of 10.4% per
annum). As of December 31, 1996 (i) approximately 3.1% of the Company's
customer mortgages receivable were 60 to 120 days past due; and (ii)
approximately 5.4% of the Company's customer mortgages receivable were more
than 120 days past due and the subject of legal proceedings. In addition, as of
such date, the Company's allowance for loss on customer mortgages receivable
was approximately $10.2 million. During the calendar year ended December 31,
1996, the Company charged approximately $3.7 million against such reserve (net
of recoveries of related Vacation Ownership Interests).

The Company also provides hospitality management, operations, maintenance and
telecommunications services at its resorts. Pursuant to management agreements
between the Company and the homeowners' associations at its existing resorts,
the Company has sole responsibility and exclusive authority for the day-to-day
operation of these resorts. In addition, the Company also provides
telecommunications design and installation services for third parties on a
limited basis.

THE RESORTS

The following table sets forth certain information as of December 31, 1996
regarding each of the Company's existing and planned resorts, including
location, the date sales of Vacation Ownership Interests commenced (or are
expected to commence), the number of existing and total planned units, the
number of Vacation Ownership Interests sold at each existing resort since its
development by the Company and the number of Vacation Ownership Interests sold
in 1996, the average sales price of Vacation Ownership Interests sold in 1996
and the number of Vacation Ownership Interests available for sale currently and
after giving effect to planned expansion. The exact number of units ultimately
constructed and Vacation Ownership Interests available for sale at each resort
may differ from the following planned estimates based on future land use,
project development, site layout considerations and customer demand. In
addition, the Company's construction and development of new resorts or
additional units at its existing resorts (and sales of the related Vacation
Ownership Interests) is dependent upon general economic conditions and other
factors and may also be subject to delay as a result of certain circumstances,
some of which are not within the Company's control. See "Risk Factors."

VACATION UNSOLD
OWNERSHIP VACATION OWNERSHIP
INTERESTS AVERAGE INTERESTS AT
DATE SALES UNITS AT RESORT SOLD(A) SALES RESORTS(A)
COMMENCED/ --------------- ------------ PRICE -------------------
EXPECTED TO TOTAL IN CURRENT PLANNED
RESORT LOCATION COMMENCE(B) CURRENT PLANNED TOTAL 1996 1996(A) INVENTORY EXPANSION
- ----------------------- ------------------ ----------- ------- ------- ------ ----- ------- --------- ---------

Vistana Resort (c) Orlando, Florida 1980 1,088 1,539 54,924 5,294(d) $10,576(d) 2,525 23,001
Vistana's Beach Hutchinson Island,
Club (e) Florida 1989 76 76 3,849 367 $ 8,422 27 0
Oak Plantation Kissimmee, Florida
Villas by Vistana (f) 1996 242 242 133 133 $ 7,380 12,222 0
Vistana Resort at St. Augustine,
World Golf Village (g) Florida 1998 -- 408 -- -- -- -- 20,808
PGA Vacation Port St. Lucie,
Resort by Vistana (h) Florida 1998 -- 250 -- -- -- -- 12,750
Myrtle Beach Resort (i) Myrtle Beach,
South Carolina 1998 -- 550 -- -- -- -- 28,050
----- ----- ------ ----- ------ ------
TOTAL 1,406 3,065 58,906 5,794 14,774 84,609
===== ===== ====== ===== ====== ======

(a) The Company sells both annual Vacation Ownership Interests (entitling the
owner to the use of a unit for a one-week period on an annual basis) and
alternate-year Vacation Ownership Interests (entitling the owner to the
use of a unit for a one-week period on an alternate-year basis) with
respect to 51 weeks per year for each of its units, with one week reserved
for maintenance of the unit. Accordingly, the Company is able to sell 51
annual Vacation Ownership Interests or 102 alternate-year Vacation
Ownership Interests per unit. For purposes of calculating Vacation
Ownership Interests Sold and Average Sales Price in 1996, data with
respect to Vacation Ownership Interests reflects Vacation Ownership
Interests sold regardless of classification as an annual or alternate-year
Vacation Ownership Interest. For purposes of calculating Unsold Vacation
Ownership Interests at Resorts, both the Current Inventory and Planned
Expansion amounts are based on sales of Vacation Ownership Interests on an
annual basis only. To the extent that alternate-year Vacation Ownership
Interests are sold, the actual number of Vacation Ownership Interests at
Resorts would be increased.
(b) Dates listed represent the dates the Company began recording (or expects
to begin recording) sales of Vacation Ownership Interests for financial
reporting purposes.

(c) Vistana Resort consists of seven development phases, six of which have
been completed and one of which is currently under construction. The
number of Units at Resort includes (i) 1,088 current existing units; and
(ii) 451 additional planned units (representing an additional 23,001
unsold annual Vacation Ownership Interests). As of December 31, 1996,
construction of 68 additional units was scheduled for completion by the
third quarter of 1997. The Company constructs additional units at various
times depending upon general market conditions and other factors.
Accordingly, construction of the remaining 383 additional units is
intended to be commenced from time to time as conditions merit. Figures
with respect to this property assume that all units to be constructed will
consist of one- and two-bedroom units; however, the actual number of
additional Vacation Ownership Interests resulting from planned
construction could vary depending upon the configuration of these units.

(d) Includes 1,810 alternate-year Vacation Ownership Interests with an average
sales price of $7,423 and 3,484 annual Vacation Ownership Interests with an
average sales price of $12,214.

(e) Vistana's Beach Club consists of two buildings containing a total of 76
current existing units, which represent 3,876 Vacation Ownership
Interests. The Company's Current Inventory of 27 annual Vacation Ownership
Interests at this resort consists primarily of previously-sold Vacation
Ownership Interests that the Company has since reacquired in connection
with defaults under customer mortgages. The Company has no plans to build
any additional units at this resort.

(f) Oak Plantation Villas by Vistana consists of 242 current existing units,
representing 12,342 annual Vacation Ownership Interests. Prior to its
acquisition by the Company in June 1996, this property was operated by a
third party as a rental apartment complex. The Company commenced
conversion of the property into a vacation ownership resort in July 1996.
As of December 31, 1996, the conversion of 61 units (representing 3,111
annual Vacation Ownership Interests) had been completed. The Company
intends to convert the remaining 181 units at various times depending upon
general market conditions and other factors. The Company currently has no
plans to build any additional units at this resort. Oak Plantation Villas
by Vistana will be operated on a franchise basis as the first Hampton
Vacation Resort pursuant to the Promus Agreement.

(g) Vistana Resort at World Golf Village will consist of an estimated 408
units, representing an estimated 20,808 annual Vacation Ownership
Interests, of which 102 units, representing 5,202 annual Vacation
Ownership Interests, are currently under construction and scheduled for
completion in the first quarter of 1998. The Company intends to commence
construction of the remaining 306 additional units from time to time as
demand and other conditions merit.

(h) PGA Vacation Resort by Vistana will consist of an estimated 250 units,
representing an estimated 12,750 annual Vacation Ownership Interests, and
will be constructed by the Company on 25 acres of land which it intends to
acquire in approximately three stages. In October 1996, the Company
entered into a letter of intent with PGA of America pursuant to which it
has agreed (subject to execution of definitive documentation and customary
due diligence) to purchase a minimum of 10 acres prior to March 21, 1997
and a total of 25 acres prior to December 31, 2000. The Company
anticipates that it will commence construction of the first 40-unit phase
of this resort (representing 2,040 annual Vacation Ownership Interests)
during the third quarter of 1997. Because the Company constructs
additional units at its resorts based on general market conditions and
other factors, construction of the remaining 210 units at this resort will
be commenced from time to time as conditions merit.

(i) In December 1996, the Company acquired the initial 14 acres of unimproved
land in Myrtle Beach, South Carolina for the development of the Myrtle
Beach Resort. The Company also has an option until December 31, 2003 to
acquire up to 26 additional acres of contiguous property for phased
expansion of the resort. The Company anticipates that it will commence
construction of the first 48-unit phase of this resort (representing 2,448
annual Vacation Ownership Interests) during the third quarter of 1997.
Because the Company constructs additional units at its resorts based on
general market conditions and other factors, construction of the remaining
502 units at this resort (assuming acquisition of the remaining 26 acres)
will be commenced from time to time as conditions merit. The Myrtle Beach
Resort will be operated as an Embassy Vacation Resort franchise pursuant
to the terms of the Promus Agreement.

CORPORATE BACKGROUND AND THE FORMATION TRANSACTIONS

The Company was incorporated in the State of Florida in December 1996 to
effect the Formation Transactions and the Offering. The Company's principal
executive offices are located at 8801 Vistana Centre Drive, Orlando, Florida
32821, and its telephone number at that address is (407) 239-3000. Following
completion of the Offering, Jeffrey A. Adler, and Raymond L. Gellein, Jr.
(together with certain trusts primarily for their benefit and the benefit of
their family members and Mr. Gellein's former spouse, the "Existing
Shareholders") will beneficially own in the aggregate approximately 70.5% of
the outstanding Common Stock (approximately 66.1% if the Underwriters' over-
allotment option is exercised in full and all shares of Common Stock subject
thereto are sold solely by the Selling Shareholders). For further information
regarding the Existing Shareholders, see "Principal and Selling Shareholders."

The business of the Company is currently conducted through (i) several
corporations and limited partnerships (collectively, the "Affiliated
Companies") which are directly or indirectly wholly-owned and controlled by the
Existing Shareholders, and (ii) two partnerships between one or more of the
Affiliated Companies and unaffiliated third party partners (collectively, the
"Related Partnerships"). Each of Vistana Resort and Vistana's Beach Club is
operated by (and unsold Vacation Ownership interests at the resorts are owned
by) Affiliated Companies. In addition, the Myrtle Beach Resort is being
developed by (and unsold Vacation Ownership Interests at this resort will be
owned by) and PGA Vacation Resort by Vistana will be developed by (and unsold
Vacation Ownership Interests at this resort will be owned by) Affiliated
Companies. Oak Plantation Villas by Vistana is operated by (and unsold Vacation
Ownership Interests at this resort are owned by) a Related Partnership in which
Affiliated Companies hold an approximately 67% controlling interest and Vistana
Resort at World Golf Village is being developed by (and unsold Vacation
Ownership Interests at this resort will be owned by) a Related Partnership in
which Affiliated Companies hold a 37.5% controlling interest. The Affiliated
Companies consist of over 20 corporations and three limited partnerships, the
ownership of each of which is divided equally between (i) trusts for the
benefit of Mr. Adler and his family members and (ii) trusts for the benefit of
Mr. Gellein and his family members and former spouse. Each of the Related
Partnerships is controlled solely by one or more of the Affiliated Companies.

Concurrently with, and conditioned upon, the completion of the Offering, each
of the Existing Shareholders has agreed to transfer to the Company all of the
outstanding capital stock and partnership interests owned by each such Existing
Shareholder, whether directly or indirectly, in each of the Affiliated
Companies and Related Partnerships (collectively, the "Formation
Transactions"). Pursuant to the Formation Transactions and as consideration for
the transfer of interests in the Affiliated Companies and Related Partnerships,
the Company has agreed to issue an aggregate of 14,174,980 shares of Common
Stock to the Existing Shareholders, certain shares of which are being sold by
the Selling Shareholders in the Offering. Following the Formation Transactions,
the ownership of all of the interests in the Affiliated Companies and Related
Partnerships currently held by the Existing Shareholders will be owned by the
Company or one of its subsidiaries. All financial information presented in this
Prospectus assumes the consummation of the Formation Transactions and reflects
20 shares of Common Stock currently outstanding and the issuance of an
aggregate of 14,174,980 shares of Common Stock to the Existing Shareholders
pursuant to the Formation Transactions. See "Principal and Selling
Shareholders."

Following consummation of the Formation Transactions, none of the Affiliated
Companies which is a corporation will be eligible to be taxed pursuant to
Subchapter S of the Internal Revenue Code of 1986, as amended (the "Code").
Accordingly, immediately prior to the Formation Transactions, the Affiliated
Companies

will make distributions to the Existing Shareholders of approximately $2.5
million in the aggregate representing (i) the balance of such persons' federal
and state income tax income liability for the year ended December 31, 1996 and
from January 1, 1997 through the consummation of the Formation Transactions and
(ii) retained earnings of the Affiliated Companies for which the owners thereof
have previously paid income tax. See "Prior Income Tax Status and Planned
Distributions.

THE OFFERING

Common Stock offered by the
Company..................... 4,625,000 shares(1)
Common Stock offered by the
Selling Shareholders........ 925,000 shares(1)
Common Stock to be
outstanding after the
Offering.................... 18,800,000 shares(1)(2)
Use of proceeds to the Of the estimated $53.8 million of net proceeds
Company..................... to the Company, the Company intends to use
approximately $39.3 million to repay outstanding
indebtedness, and approximately $14.5 million
for the acquisition, development and expansion
of existing and future resorts, and working
capital and general corporate purposes.
Proposed Nasdaq National
Market symbol............... VSTN

- --------
(1) Assumes no exercise of the Underwriters' over-allotment option. See
"Underwriting."

(2) Does not include 535,000 shares of Common Stock issuable upon exercise of
options outstanding as of December 31, 1996 under the Vistana, Inc. Stock
Plan (the "Stock Plan") or additional shares of Common Stock issuable upon
exercise of options which may be granted concurrently with the completion
of the Offering. See "Management--Stock Plan."

RISK FACTORS

For a discussion of risk factors that should be considered in evaluating an
investment in the Common Stock, including risks related to rapid growth,
pending developments, competition, the historical concentration of the
Company's business in the Orlando and Florida markets, dependence on key
personnel, the control of the Company by the Existing Shareholders, general
economic conditions, the Company's development and construction activities, the
Company's customer financing activities, governmental regulation, the absence
of a public market for the Common Stock prior to the completion of the
Offering, the dilution in pro forma net tangible book value per share to be
experienced by purchasers of Common Stock in the Offering and the effect which
certain future sales of Common Stock may have upon the market price of the
Common Stock, among others, see "Risk Factors."

SUMMARY COMBINED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION(A)

(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND OPERATING DATA)

HISTORICAL PRO FORMA(B)
------------------------------------------------ ------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
------------------------------------------------ ------------
1992 1993 1994 1995 1996 1996
-------- -------- -------- -------- -------- ------------

STATEMENT OF OPERATIONS:
Revenues:
Vacation Ownership
Interest sales........ $ 48,503 $ 55,658 $ 54,186 $ 50,156 $ 60,063 $ 60,063
Interest............... 4,662 5,096 7,654 12,886 15,546 15,546
Resort................. 9,977 10,877 11,834 12,613 13,587 13,587
Telecommunications..... 1,703 1,980 3,378 4,802 7,054 7,054
Other.................. 489 551 584 652 686 686
-------- -------- -------- -------- -------- ----------
Total revenues.......... 65,334 74,162 77,636 81,109 96,936 96,936
-------- -------- -------- -------- -------- ----------
COSTS AND OPERATING
EXPENSES:
Vacation Ownership
Interest cost of
sales................. 10,254 11,521 11,391 12,053 14,595 14,595
Sales and marketing.... 17,689 21,866 22,872 22,318 27,877 27,877
Loan portfolio
Interest expense--
treasury.............. 1,556 2,070 3,605 6,516 6,865 5,904
Provision for doubtful
accounts.............. 3,405 3,903 3,803 3,522 4,271 4,271
Resort................. 8,594 9,493 10,037 10,585 11,089 11,089
Telecommunications..... 1,358 1,537 2,520 3,654 5,613 5,613
General and
administrative........ 6,628 7,419 7,988 6,979 7,873 7,873
Depreciation and
amortization.......... 875 875 1,392 2,215 2,553 2,295
Interest expense--
other................. 2,523 2,269 2,106 3,168 4,154 965
Other.................. 1,688 1,318 1,241 1,020 443 443
Deferred executive
incentive
compensation.......... 402 380 332 3,448 1,114 1,114
-------- -------- -------- -------- -------- ----------
Total costs and
operating expenses..... 54,972 62,651 67,287 75,478 86,447 82,039
-------- -------- -------- -------- -------- ----------
Operating income........ 10,362 11,511 10,349 5,631 10,489 14,897
Excess value
recognized............ 1,151 701 365 219 105 105
-------- -------- -------- -------- -------- ----------
Pretax income........... 11,513 12,212 10,714 5,850 10,594 15,002
Provision for taxes.... -- -- -- -- -- 5,382
-------- -------- -------- -------- -------- ----------
Net income.............. $ 11,513 $ 12,212 $ 10,714 $ 5,850 10,594 $ 9,620
======== ======== ======== ======== ======== ==========
Pro forma net
income(c).............. $ 6,907 $ 7,780 $ 6,730 $ 3,724 $ 6,871
Pro forma net income per
share of Common Stock.. $ 0.51
Pro forma weighted
average shares of
Common Stock
outstanding............ 18,800,000
CASH FLOW DATA:
EBITDA(d)............... $ 15,316 $ 16,725 $ 17,452 $ 15,468 $ 21,304
Cash flow provided by
(used in):
Operating activities... $ 17,544 $ 10,602 $ 13,215 $ 12,524 $ 15,629
Investing activities... $(21,244) $(20,444) $(20,383) $(22,651) $(26,351)
Financing activities... $ 3,410 $ 11,085 $ 6,512 $ 15,131 $ 9,313
OPERATING DATA:
Number of resorts at
year end............... 2 2 2 2 3
Number of Vacation
Ownership Interests
sold(e)................ 4,980 5,679 5,582 5,190 5,794
Number of Vacation
Ownership Interests in
inventory at year
end(f)................. 1,967 3,781 3,822 3,054 14,774
Average price of
Vacation Ownership
Interests sold......... $ 9,740 $ 9,801 $ 9,707 $ 9,664 $ 10,366

DECEMBER 31, 1996
-----------------------
ACTUAL AS ADJUSTED(G)
-------- --------------

BALANCE SHEET DATA (AT YEAR END):
Cash (including restricted cash)........................ $ 9,981 $ 21,959
Total assets............................................ $173,922 $185,021
Notes and mortgages payable............................. $118,557 $ 79,586
Shareholders' equity.................................... $ 26,648 $ 65,948

(a) The Summary Financial Information was derived from the "Selected Combined
Historical Financial Information" and the Company's Combined Financial
Statements and related Notes thereto appearing elsewhere in this
Prospectus. The information set forth in this table should be read in
conjunction with "Selected Combined Historical Financial Information,"
"Pro Forma Combined Financial Information," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and the
Combined Financial Statements and related Notes thereto appearing
elsewhere in this Prospectus.

(b) Pro Forma Financial Information gives effect to the Formation
Transactions, the Offering, the retirement of $39.0 million of debt,
elimination of interest expense related to the retired debt, elimination
of amortization related to prepaid financing fees on the retired debt and
the treatment of the combined Company as a C corporation rather than the
treatment of Affiliated Companies as S corporations and limited
partnerships for federal income tax purposes.

(c) Reflects the effect on historical statements, assuming the Company had
been treated as a C corporation rather than the treatment of Affiliated
Companies as S corporations and limited partnerships for federal income
tax purposes.

(d) As shown below, EBITDA represents net income before interest expense,
income taxes, depreciation and amortization and excess value recognized
which reflects the amortization of the difference between the fair value
of the Company at the time of its purchase by Messrs. Gellein and Adler
and a third individual, less the purchase price paid to acquire the
Company. EBITDA does not represent cash flows from operations and should
not be considered to be an alternative to net income as an indicator of
operations performance or to cash flows from operations as a measure of
liquidity. In addition, the Company's presentation of EBITDA could differ
from similar presentations prepared by other companies. Management
believes that EBITDA represents a useful measure to evaluate the Company's
results of operations, without reference to its capitalization and tax
structure. Management also believes EBITDA is a useful indicator of the
Company's ability to service and/or incur indebtedness because it adjusts
net income for non-cash expenditures, taxes and existing interest
expenses. Management believes that the trends depicted by the changes in
EBITDA set forth below demonstrate the Company's use of borrowing and the
resultant increase in interest expense associated with its growth. The
following table reconciles EBITDA to net income:

YEAR ENDED DECEMBER 31,
-------------------------------------------
1992 1993 1994 1995 1996
------- ------- ------- ------- -------

Net Income...................... $11,513 $12,212 $10,714 $ 5,850 $10,594
Interest expense--treasury...... 1,556 2,070 3,605 6,516 6,865
Interest expense--other......... 2,523 2,269 2,106 3,168 4,154
Taxes........................... 0 0 0 0 0
Depreciation and amortization... 875 875 1,392 2,215 2,553
Amortization of discount on
customer mortgages receivable.. 0 0 0 (2,062) (2,757)
Excess value recognized......... (1,151) (701) (365) (219) (105)
------- ------- ------- ------- -------
EBITDA.......................... $15,316 $16,725 $17,452 $15,468 $21,304
======= ======= ======= ======= =======

(e) Includes both annual and alternate-year Vacation Ownership Interests.
(f) Inventory classified as annual Vacation Ownership Interests.

(g) Adjusted to give effect to (i) the sale of 4,625,000 shares of Common
Stock offered hereby at an offering price of $13.00 per share less the
underwriting discounts and commissions and expenses of the Offering; (ii)
the retirement of $39.0 million of debt; (iii) the write-off of prepaid
financing fees associated with the retired debt; and (iv) the treatment of
the Company as a C corporation resulting in a deferred tax liability of
$10.8 million.

RISK FACTORS

Prospective investors should carefully consider the following information in
conjunction with the other information contained in this Prospectus before
purchasing any of the shares of Common Stock offered hereby. The following
sets forth the material risks of an investment in the Common Stock; however,
the Company cautions the reader that this list of risk factors may not be
exhaustive.

RISKS OF RAPID GROWTH

Risks Associated with Execution of Growth Strategy. A principal component of
the Company's growth strategy is to acquire additional unimproved real estate
for the construction and development of new vacation ownership resorts. The
Company's ability to execute its growth strategy depends on a number of
factors, including (i) the availability of attractive resort development
opportunities; (ii) the Company's ability to acquire unimproved real estate
relating to such opportunities on economically feasible terms; (iii) the
Company's ability to obtain the capital necessary to finance the acquisition
of unimproved real estate and develop vacation ownership resorts thereon, as
well as to cover any necessary sales, marketing and resort operation
expenditures; (iv) the Company's ability to market and sell Vacation Ownership
Interests at newly-developed vacation ownership resorts; and (v) the Company's
ability to manage newly-developed vacation ownership resorts cost-effectively
and in a manner which results in significant customer satisfaction. There can
be no assurance that the Company will be successful with respect to any or all
of these factors.

Risks Associated with Expansion into New Markets. Because the Company's
pending resort developments near St. Augustine, Florida, Port St. Lucie,
Florida and Myrtle Beach, South Carolina are outside the Company's historical
geographical area of operation, the Company's resort development and operation
experience in the Orlando, Florida area does not ensure the success of the
development or operation of these properties or the marketing of Vacation
Ownership Interests at such locations. Accordingly, in connection with such
pending developments, the Company may be exposed to a number of risks,
including risks associated with (i) the lack of local market knowledge and
experience; (ii) the inability to hire, train and retain sales, marketing and
resort staff at such locations; (iii) the inability to obtain, or obtain in a
timely manner, necessary permits and approvals from state and local government
agencies; (iv) the inability to secure sufficient marketing relationships with
local hospitality, retail and tourist attraction operators; (v) the inability
to capitalize on the new marketing relationships and development agreements
associated with certain of the Company's growth strategies; and (vi) the
uncertainty involved in, and additional costs which may be associated with,
selling Vacation Ownership Interests prior to completion of the related unit.

Risks Associated with Resorts Involving the Golf Industry. The success of
the Company's golf-oriented vacation ownership resorts is substantially
dependent upon the continued popularity of golf in general, as well as the
desirability of the golf courses and golf-related facilities that will be
associated with the Company's resorts. Linking the success of the Company's
resorts to related golf course operations is a new strategy for the Company
and may require the Company to adopt new sales and marketing approaches and
enter into new business relationships. In addition, there are numerous other
factors that affect the golf industry, including seasonality, adverse weather
conditions, competition and the supply of alternative golf-related
destinations, and the popularity of the sport of golf, any of which may
adversely affect the Company's results of operations at these resorts.
Accordingly, there can be no assurance that this aspect of the Company's
growth strategy will be successful or that the Company will be able to
implement this strategy effectively.

Risks Associated with Promus Agreement. An important part of the Company's
growth strategy is to acquire, develop, market and operate vacation ownership
resorts with Promus pursuant to the Promus Agreement, which imposes capital
requirements and allocates profits and losses of all joint developments on an
equal basis. In the event that the Company and Promus are unable to agree on
an initial development plan and related agreements within the period provided
in the Promus Agreement, or to develop jointly a vacation ownership resort
within the first three years of the term of the Promus Agreement, either party
will be entitled to terminate the Promus Agreement. These timetables may cause
the Company to overcommit its resources to the Promus

Agreement and the development of vacation ownership resorts thereunder at the
expense of other opportunities or the Company's existing business operations.
In addition, in order to maintain its franchise relationship with Promus, the
Company may be required to incur expenditures and meet other obligations at
the franchised resorts required by the applicable franchise agreements, which
may (i) increase its operating costs and (ii) limit the Company's flexibility
with respect to the operation of the applicable resort in order to comply with
the applicable franchise agreements. Moreover, although the Promus Agreement
contains mutual exclusivity provisions that the Company believes will be
beneficial to the growth of its business, the Promus Agreement prevents (or
significantly restricts) the Company's ability to develop vacation ownership
resorts with other partners in the hotel industry or under its own name in
certain markets. There can be no assurance that Promus will be a favorable
partner for the Company, or that the Promus Agreement will not prevent the
Company from developing resorts under its own name or entering into similar
agreements with another hotel company, even where such developments or
agreements would be in the Company's best interests. See "Business--
Affiliation with Promus."

RISKS ASSOCIATED WITH PENDING DEVELOPMENTS

The Company has entered into a letter of intent to acquire unimproved real
estate near Port St. Lucie, Florida and to develop a vacation ownership resort
at this location. Completion of this transaction remains subject to execution
of definitive documentation and satisfaction of certain conditions precedent.
If any of these events do not occur, the Company may be unable to complete
this transaction, in which case the Company may be unable to develop a
vacation ownership resort at this location. See "Business--Description of the
Company's Resorts."

COMPETITION

The Company is subject to significant competition from other entities
engaged in the leisure and vacation industry, including vacation ownership
resorts, hotels, motels and other accommodation alternatives. Many of the
world's most widely-recognized lodging, hospitality and entertainment
companies have begun to develop and sell Vacation Ownership Interests under
their brand names, including, Marriott International, Inc. ("Marriott"), The
Walt Disney Company ("Disney"), Hilton Hotels Corporation ("Hilton"), Hyatt
Corporation ("Hyatt"), Four Seasons Hotels & Resorts, Inc. ("Four Seasons"),
Inter-Continental Hotels and Resorts, Inc. ("Inter-Continental"), Westin
Hotels & Resorts ("Westin") and Promus. In addition, other publicly-traded
companies focused on the vacation ownership industry, such as Signature
Resorts, Inc. ("Signature"), Fairfield Communities, Inc. ("Fairfield") and
Vacation Break U.S.A., Inc. ("Vacation Break"), currently compete, or may in
the future compete, with the Company. Moreover, competition in the Orlando
market is particularly intense and includes many nationally recognized
lodging, hospitality and entertainment companies, as well as active privately-
owned local operators of vacation ownership resorts such as Central Florida
Investments, Inc. ("CFI") and Orange Lake Country Club ("Orange Lake").
Furthermore, significant competition exists in Myrtle Beach, South Carolina, a
destination in which the Company expects to commence sales of Vacation
Ownership Interests by 1998. Many of these entities possess significantly
greater financial, sales and marketing, personnel and other resources than
those of the Company and may be able to grow at a more rapid rate or more
profitably as a result. Management of the Company believes that industry
competition will be increased by recent and possibly future consolidation in
the vacation ownership industry.

CONCENTRATION OF ACTIVITIES IN ORLANDO AND FLORIDA MARKETS

As of December 31, 1996, substantially all of the Company's operations were
located in Florida and substantially all of the Company's historical revenues
have been generated from this market. Although the Company has conducted the
majority of its resort operations in the Orlando area since 1980, there can be
no assurance that the Company will be able to continue to compete effectively
in the Orlando market. The failure to compete effectively in the Orlando
market could have a material adverse effect on the Company's results of
operations. Moreover, all three of the Company's operating resorts are located
in Florida and, following the completion of certain pending developments, five
out of six of the Company's resorts will be located in Florida. See
"Business--Description of the Company's Resorts." The concentration of the
Company's resorts in these areas could make the Company more susceptible to
adverse events or conditions which affect these areas in particular, such as
hurricanes, windstorms, economic recessions and changes in tourism or vacation
patterns and could result in a material adverse effect on the Company's
operations.

DEPENDENCE ON KEY PERSONNEL

The Company's success depends to a significant extent upon the experience
and abilities of Raymond L. Gellein, Jr., the Chairman of the Board, Co-Chief
Executive Officer and a director of the Company, and Jeffrey A. Adler, the
President, Co-Chief Executive Officer and a director of the Company. The loss
of the services of one or both of these individuals could have a material
adverse effect on the Company and its business prospects. The Company's
continued success is also dependent upon its ability to hire, train and retain
qualified marketing, sales, hospitality, development, acquisition, finance,
management and administrative personnel. Such personnel are in substantial
demand and the cost of attracting or retaining such key personnel could
escalate over time. There can be no assurance that the Company will be
successful in attracting or retaining such personnel. See "Management--
Employment Agreements."

CONTROL BY EXISTING SHAREHOLDERS FOLLOWING THE OFFERING; SHAREHOLDERS'
AGREEMENT

After the completion of the Offering, the Existing Shareholders will own
and/or have voting control of approximately 70.5% of the outstanding shares of
Common Stock (approximately 66.1% if the Underwriters' over-allotment option
is exercised in full and all shares of Common Stock subject thereto are sold
solely by the Selling Shareholders). As a result, by maintaining their
ownership of Common Stock, the Existing Shareholders will have the power to
elect the entire Board of Directors, determine the policies of the Company,
appoint the persons constituting the Company's management and determine the
outcome of corporate actions requiring shareholder approval. In addition,
pursuant to the Shareholders' Agreement (as defined herein), the Existing
Shareholders have agreed to vote their shares of Common Stock in favor of
proxies solicited by the Board of Directors, unless Messrs. Gellein and Adler
both disagree with the position taken by the Board of Directors. See "Certain
Relationships and Related Transactions," "Principal and Selling Shareholders"
and "Description of Capital Stock."

GENERAL ECONOMIC CONDITIONS; CONCENTRATION IN THE VACATION OWNERSHIP INDUSTRY

Any adverse change in economic conditions or significant price increases or
adverse events related to the travel and tourism industry, such as the cost
and availability of fuel, could have a material adverse effect on the
Company's business. Such conditions or increases may also adversely affect the
future availability and cost of financing for the Company or its customers and
result in a material adverse effect on the Company's business. In addition,
changes in general economic conditions may adversely affect the Company's
ability to collect on its customer mortgages receivable outstanding to its
Vacation Ownership Interest buyers. Moreover, because the Company's operations
are conducted principally within the vacation ownership industry, any adverse
changes affecting the vacation ownership industry such as (i) an oversupply of
Vacation Ownership Interests; (ii) a reduction in demand for Vacation
Ownership Interests; (iii) changes in travel and vacation patterns; (iv)
changes in governmental regulation of the vacation ownership industry; (v)
increases in construction costs or taxes; (vi) changes in the deductibility of
mortgage interest payments for federal or state income tax purposes; or (vii)
negative publicity with respect to the vacation ownership industry, could have
a material adverse effect on the Company.

RISKS ASSOCIATED WITH DEVELOPMENT AND CONSTRUCTION ACTIVITIES

The Company intends to actively continue acquisition, development,
construction, conversion and expansion of vacation ownership resorts. Risks
associated with such activities include risks that (i) acquisition or
development opportunities may be abandoned; (ii) construction costs may exceed
original estimates, possibly making the development, expansion or conversion
uneconomical or unprofitable; (iii) construction or conversion may not be
completed on schedule, possibly resulting in delayed recognition of revenues
and increased interest expense; (iv) zoning, land-use, construction, occupancy
and other required governmental permits and authorizations may not be obtained
or may be delayed; and (v) financing necessary to complete the necessary
acquisition, development, construction, conversion or expansion activities may
not be obtained or may not be available on favorable terms. Upon the
completion of the Offering, the Company will not have the financing available
to complete all of the planned expansion and development activities described
in "Business--

Description of the Company's Resorts." In addition, certain state and local
laws may impose liability on property developers with respect to construction
defects discovered or repairs made by future owners of such property, and, as
a result, owners may be able to recover from the Company amounts in connection
with such defects or repairs related to the property. Accordingly, there can
be no assurance that the Company will (i) complete conversion of Oak
Plantation Villas by Vistana; (ii) complete development of Vistana Resort at
World Golf Village; (iii) complete expansion projects currently under
development at Vistana Resort; (iv) undertake or complete the development of
the Myrtle Beach Resort (or acquire the additional 26 acres at such location);
or (v) undertake to develop other resorts or complete any such development if
undertaken. As a result of these risks, the Company's revenues and net
operating income may be adversely impacted.

RISKS ASSOCIATED WITH WORLD GOLF VILLAGE PROJECT

The success of the Company's development of Vistana Resort at World Golf
Village is dependent upon the concurrent development by third parties of the
surrounding properties and related component facilities comprising the World
Golf Village project and the planned community of Saint Johns in which it is
located. Although the Company has entered into agreements with such third
parties respecting such matters, there can be no assurance that such third
parties will fulfill their obligations under such agreements. In addition, the
Company is contingently liable for 15% of annual debt service shortfalls on
certain taxable revenue bonds (the "County Bonds") issued to finance the
convention center at World Golf Village. If the surrounding properties and
related facilities comprising the World Golf Village project are not
developed, not developed on a timely basis, are of an inferior quality, or if
the annual pledged revenues from the World Golf Village component facilities
are not adequate to support the required debt service on the County Bonds, the
Company's results of operations at Vistana Resort at World Golf Village may be
materially adversely impacted.

RISKS ASSOCIATED WITH CUSTOMER MORTGAGES RECEIVABLE

Risks of Customer Default. The Company extends financing to purchasers of
Vacation Ownership Interests at its resorts. These purchasers generally make a
down payment equal to at least 10% of the sales price and borrow the remaining
sales price from the Company. These borrowings bear interest at fixed rates,
are secured by first mortgages on the underlying Vacation Ownership Interests
and amortize over periods ranging up to seven years. The Company bears the
risk of defaults under its customer mortgages on Vacation Ownership Interests.
If a purchaser of a Vacation Ownership Interest defaults on the mortgage
during the early part of the loan amortization period, the Company will not
have recovered its marketing, selling (other than certain sales commissions),
and general and administrative costs per Vacation Ownership Interest, and such
costs will again be incurred in connection with the subsequent resale of the
Vacation Ownership Interest. As is sometimes the practice in the vacation
ownership industry, the Company does not verify the credit history of its
customers. In addition, although in certain jurisdictions the Company may have
recourse against a defaulting customer for the sales price of the Vacation
Ownership Interest, the Company has not historically pursued such a remedy.
Accordingly, no assurance can be given that the sales price will be fully or
partially recovered from a defaulting customer, or in the event of such
defaults, that the Company's established loan loss reserves will be adequate.
The Company has recently begun to offer customer mortgages with a ten-year
term. Although the increased term has been introduced on a limited basis,
there can be no assurance that the inclusion of customer mortgages with a ten-
year maturity will not have an adverse effect on the performance of the
Company's portfolio of customer mortgages receivable. See "Business--Customer
Financing."

Risks Related to Funding Customer Mortgages Receivable. The Company funds
its resort acquisition and development and operations by borrowing up to 90%
of the aggregate principal amount of its customer mortgages receivable under
its existing credit facilities. The Company does not presently have existing
credit facilities or binding lender commitments to supply all of the financing
the Company anticipates that it will need to construct and develop all of the
resorts it plans to develop or market and sell all of the Vacation Ownership
Interests at such resorts, and there can be no assurance that alternative or
additional credit arrangements can be obtained on terms that are satisfactory
to the Company. Accordingly, future sales of Vacation Ownership Interests may
be limited by the availability of funds to finance the initial negative cash
flow attributable to

Vacation Ownership Interest sales financed by the Company (i.e., the amount by
which the Company's product cost and marketing, sales and general
administrative expenses per Vacation Ownership Interest exceeds the customer's
down payment). In addition, if the Company were required to sell its customer
mortgages receivable in order to satisfy its cash flow needs, the Company
would cease to be eligible to report income attributable to sales of Vacation
Ownership Interests on the installment sales method for federal income tax
purposes and, as a result, the Company would be required to accelerate the
payment of a substantial federal income tax liability with respect to the
customer mortgages receivable sold. Such an event could have a material
adverse effect on the Company's cash flow from operations. See "Business--
Customer Financing."

RISKS ASSOCIATED WITH LEVERAGE

It is likely that the Company's future business activities will be financed,
in whole or in part, with indebtedness obtained pursuant to additional
borrowings under the Company's existing credit facilities or under credit
facilities to be obtained by the Company in the future. The definitive
agreements with respect to these credit facilities could contain restrictive
covenants which limit the Company's ability to, among other things, make
capital expenditures, incur additional indebtedness and dispose of assets, or
which require the Company to maintain certain financial ratios. The
indebtedness incurred under these credit facilities may be secured by
mortgages on a portion of the Company's resort properties, customer mortgages
receivable and other assets of the Company. In the event of a default by the
Company under one or more or these credit facilities, the lenders could
foreclose on the resort properties secured by a mortgage or take possession of
other assets pledged as collateral. In addition, the extent of the Company's
leverage and the terms of the Company's indebtedness (such as requirements
that the Company maintain certain debt-to-equity ratios) could impair the
Company's ability to obtain additional financing in the future, to make
acquisitions or to take advantage of significant business opportunities that
may arise. Furthermore, the Company's indebtedness and related debt service
obligations may increase its vulnerability to adverse general economic and
vacation ownership industry conditions and to increased competitive pressures.
After giving effect to the Offering and the application of the net proceeds
therefrom, based on the Company's current resort development and operating
plans, prior to December 31, 1997 the Company expects to decrease its
outstanding indebtedness by approximately $18.9 million. There can be no
assurance, however, that the Company will not be required to incur additional
indebtedness during 1997 in the event that it makes additional development or
construction commitments or the Company's existing commitments require it to
spend more than is currently budgeted. See "Management's Discussion and
Analysis of Financial Conditions and Results of Operations--Liquidity and
Capital Resources."

RISKS ASSOCIATED WITH HEDGING ACTIVITIES

The Company has historically derived net interest income from its financing
activities as a result of the difference between the interest rates it charges
its customers who finance their purchase of a Vacation Ownership Interest and
the interest rates it pays its lenders. There can be no assurance of a
continued positive difference between fixed rates of interest applicable to
the Company's customer mortgages receivable and the rates on the Company's
existing indebtedness. Because the Company's indebtedness bears interest at
variable rates and the Company's customer mortgages receivable bear interest
at fixed rates, the Company bears the risk of increases in interest rates with
respect to its indebtedness. The Company engages in interest rate hedging
activities from time to time in order to reduce the risk and impact of
increases in interest rates with respect to such indebtedness. Derivative
instruments used by the Company consist only of interest rate swap agreements,
which effectively fix the interest rate on the Company's variable interest
rate indebtedness. The Company does not engage in any speculative or profit-
motivated hedging activities. At December 31, 1996, the Company had two
outstanding interest rate swap agreements with a commercial bank covering a
total notional principal amount of approximately $14.5 million. The Company is
exposed to risks related to the nonperformance of the interest rate swap
agreements by the other parties thereto. There can be no assurance that any
such interest rate hedging activity will be adequate at any time to protect
the Company fully from any adverse changes in interest rates. In addition, to
the extent that interest rates decrease, the Company faces an increased risk
that customers will pre-

pay their mortgage loans, an event which would decrease the Company's income
from financing activities. See "Business--Customer Financing."

BENEFITS TO EXISTING SHAREHOLDERS AND EXECUTIVE OFFICERS

The Existing Shareholders and certain senior executive officers and other
employees of the Company will receive material benefits in connection with the
completion of the Offering that will not be received generally by purchasers
of Common Stock in the Offering. The Existing Shareholders will receive net
proceeds from the Offering, after deduction of underwriting discounts and
commissions, aggregating approximately $11.2 million in connection with the
sale of an aggregate of 925,000 shares of Common Stock ($21.2 million if the
Underwriter's over-allotment option is exercised in full and all shares of
Common Stock subject thereto are sold solely by the Selling Shareholders). The
Existing Shareholders will receive distributions aggregating approximately
$2.5 million immediately prior to the completion of the Offering in connection
with the termination of the S corporation election by the Affiliated Companies
which are corporations. This amount represents approximately $2.2 million of
undistributed S corporation earnings and a distribution of approximately $0.3
million to permit the Existing Shareholders to pay their respective federal
income taxes attributable to the Company's operations prior to the completion
of the Offering. Certain senior executive officers and other employees of the
Company (i) will execute new employment agreements with the Company; (ii) have
received options to purchase an aggregate of 535,000 shares of Common Stock
pursuant to the Stock Plan; and (iii) will receive options to purchase an
additional 1,350,000 shares of Common Stock granted by the Existing
Shareholders. See "Prior Income Tax Status and Planned Distributions,"
"Management--Executive Compensation" and "Principal and Selling Shareholders."

LIMITED RESALE MARKET FOR VACATION OWNERSHIP INTERESTS

The Company sells Vacation Ownership Interests to buyers for leisure and not
investment purposes. The Company believes that the market for resale of
Vacation Ownership Interests by such buyers is presently limited and that any
resales of Vacation Ownership Interests are typically at prices substantially
less than the original purchase price. These factors may make ownership of
Vacation Ownership Interests less attractive to prospective buyers. In
addition, attempts by buyers to resell their Vacation Ownership Interests may
compete with sales of Vacation Ownership Interests by the Company. Moreover,
the market price of Vacation Ownership Interests sold by the Company could be
depressed by a substantial number of Vacation Ownership Interests offered for
resale by the Company's customers.

RISKS ASSOCIATED WITH VACATION OWNERSHIP INTEREST EXCHANGE NETWORKS

The attractiveness of Vacation Ownership Interests is enhanced significantly
by the availability of exchange networks that allow owners of Vacation
Ownership Interests to exchange their occupancy right granted by their
Vacation Ownership Interest during a particular year for an occupancy right
granted at another participating network resort. Several companies, including
RCI, provide broad-based Vacation Ownership Interest exchange services, and
each of the Company's operating resorts is currently qualified for
participation in the RCI exchange network. No assurance can be given that the
Company will continue to be able to qualify its existing resorts, or will be
able to qualify its future resorts, for participation in the RCI network or
any other exchange network, or that the Company's customers will continue to
be satisfied with RCI's exchange network. If such exchange networks cease to
function effectively, if the Company's resorts are not accepted as exchanges
for other desirable resorts, or if RCI ceases to be a leading Vacation
Ownership Interest exchange network, the Company's sales of Vacation Ownership
Interests could be materially adversely affected. Moreover, the Company's
agreement with RCI provides that until May 2001, the RCI exchange program will
be the only exchange program permitted at resorts owned and controlled by the
Company. In addition, each of the Company, and Messrs. Gellein and Adler have
agreed that, until May 2001, each vacation ownership resort owned, developed
or managed by an entity in which Messrs. Gellein or Adler have a controlling
interest will execute an affiliation agreement with RCI with an initial six-
year term. HFS Incorporated recently acquired RCI and there can be no
assurance that the

Company's relationship with RCI will continue in the manner historically
maintained. See "Business--Participation in Vacation Ownership Interest
Exchange Networks."

RISKS ASSOCIATED WITH GOVERNMENTAL REGULATION

The Company's marketing and sales of Vacation Ownership Interests and other
resort operations are subject to extensive regulation by the federal
government and the states in which the Company's resorts are located and in
which its Vacation Ownership Interests are marketed and sold. Federal
legislation to which the Company is or may be subject includes the Federal
Trade Commission Act, the Fair Housing Act, the Truth-in-Lending Act, the Real
Estate Settlement Procedures Act, the Equal Credit Opportunity Act, the
Interstate Land Sales Full Disclosure Act, the Telephone Consumer Protection
Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act and the
Civil Rights Acts of 1964 and 1968. The Florida Condominium Act and the
Florida Vacation Plan and Timesharing Act extensively regulate the creation
and management of timeshare condominiums, the marketing and sale of Vacation
Ownership Interests, the escrow of purchaser funds and other property prior to
completion of construction and closing, the content and use of advertising
materials and promotional offers, the creation and operation of exchange
programs and multi-site timeshare plan reservation systems, and the resale of
Vacation Ownership Interests. In addition, many states have adopted similar
legislation as well as specific laws and regulations regarding the sale of
Vacation Ownership Interests. The laws of most states, including Florida and
South Carolina, require a designated state authority to approve a detailed
offering statement describing the Company and all material aspects of the
resort and sale of Vacation Ownership Interests at such resort. In addition,
the laws of most states in which the Company sells Vacation Ownership
Interests grant the purchaser of a Vacation Ownership Interest the right to
rescind a contract of purchase at any time within a specified rescission
period provided by law following the earlier of the date the contract was
signed or the date the purchaser received the last of the documents required
to be provided by the Company. Furthermore, most states have other laws which
regulate the Company's activities, such as real estate licensure laws, travel
sales licensure laws, anti-fraud laws, telemarketing laws, price, gift and
sweepstakes laws, and labor laws. The Company believes that it is in material
compliance with all applicable federal, state, local and foreign laws and
regulations to which it is currently subject. However, there can be no
assurance that the cost of compliance with such laws and regulations will not
be significant or that the Company is in fact in compliance with such laws and
regulations. In addition, there can be no assurance that laws and regulations
applicable to the Company in any specific jurisdiction will not be revised or
that other laws or regulations will not be adopted which could increase the
Company's cost of compliance or prevent the Company from selling Vacation
Ownership Interests or conducting other operations in such jurisdiction. Any
failure to comply with any applicable law or regulation, or any increases in
the costs of compliance could have a material adverse effect on the Company.
See "Business--Governmental Regulation."

POTENTIAL ENVIRONMENTAL LIABILITIES

Under various federal, state and local laws, the owner or operator of real
property may be liable for the costs required to remove or remediate certain
hazardous or toxic substances located on or in, or emanating from, such
property. Such laws often impose such liability without regard to whether the
owner or operator knew of, or was responsible for, the presence of such
hazardous or toxic substances. Noncompliance by the Company with these and
other environmental, health or safety requirements may result in the need to
cease or alter operations at one or more of its resorts. Phase I assessment
environmental reports (which typically involve inspection without soil
sampling or ground water analysis) have recently been prepared by independent
environmental consultants for each of the Company's existing resorts and
properties subject to acquisition. None of these reports indicate that any
environmental conditions exist at any of these resorts which would have a
material adverse effect on the Company.

VARIABILITY OF QUARTERLY RESULTS

The Company has historically experienced, and expects to continue to
experience, quarterly fluctuations in its gross revenues and net income from
the sale of its Vacation Ownership Interests and resort operations. The

Company's revenues are moderately seasonal with owner and guest activity the
greatest from February through April and June through August. In addition,
earnings may be adversely impacted by the timing of the completion of the
development of future resorts, changes in travel and vacation patterns, and
weather or other natural disasters at the Company's resort locations. As the
Company enters new markets, it may experience increased or different
seasonality when compared with its previous operating history. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

RISKS ASSOCIATED WITH RESORT MANAGEMENT

The Company currently provides both hospitality and homeowners' association
management services at its existing vacation ownership resorts and intends to
provide the same services at its future vacation ownership resorts pursuant to
management agreements with the associations at such resorts. These agreements
are generally for three-year terms which automatically renew unless terminated
by the homeowners' association. If the Company is unable to manage a resort in
a manner which maintains satisfaction among the homeowners, applicable law may
give the homeowners' association rights to terminate the management agreement.
For the year ended December 31, 1996, approximately 2.6% of the Company's
revenues were derived from fees paid by homeowners' associations pursuant to
the homeowners' association management agreements. No single management
agreement with a homeowners' association accounted for more than 0.4% of the
Company's revenues. There can be no assurance that a homeowners' association
will not terminate its management agreement with the Company. Any such
termination could have a material adverse effect on the results of the
Company's resort management operations and revenues.

RISKS ASSOCIATED WITH TELECOMMUNICATIONS OPERATIONS

The Company provides telecommunications services at its resorts pursuant to
contractual arrangements with each of the homeowners' associations at its
resorts, as well as limited telecommunications design and installation
services for third parties. These telecommunications services consist
primarily of leasing telephone equipment, remarketing long distance telephone
services and designing and installing telecommunications infrastructures.
Risks associated with this aspect of the Company's business include cost
overruns on design or installation contracts, liabilities in connection with
products or services provided by the Company, increased competitive and
regulatory pressures particularly with respect to long-distance rate pricing,
and non-renewal or termination of the Company's telecommunications service
contracts by a homeowners' association. In addition, there can be no assurance
that the Company can continue to provide limited telecommunications design and
installation services on a competitive or profitable basis.

UNINSURED LOSS; NATURAL DISASTERS

There are certain types of losses that are not generally insured because
they are either uninsurable or not economically feasible to insure and for
which the Company does not have insurance coverage. Should an uninsured loss
or a loss in excess of insured limits occur, the Company could lose its
investment in a resort as well as the anticipated future revenues from such
resort, and would continue to be obligated on any mortgage indebtedness or
other obligations related to the resort. Moreover, if a homeowners'
association fails to adequately insure the property committed to the
condominium form of ownership (typically, all units, common areas, facilities
and amenities), any uninsured or under-insured casualty may affect the
Company's ability to collect customer mortgages receivable related to such
condominium property. In addition, the Company's vacation ownership resorts
are located in areas that are susceptible to tropical storms and hurricanes.
The Company's resorts could suffer significant damage as a result of wind
storms, hurricanes, floods and other natural disasters. Any such damage, as
well as adverse weather conditions generally, could impair the Company's
ability to sell Vacation Ownership Interests at its resorts and adversely
affect the Company's results of operation.

ABSENCE OF PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

There has been no prior public market for the Company's Common Stock.
Although the Common Stock has been approved for quotation on the Nasdaq
National Market, subject to official notice of issuance, there can

be no assurance that a viable public market for the Common Stock will develop
or be sustained after the completion of the Offering or that purchasers of the
Common Stock will be able to resell their Common Stock at prices equal to or
greater than the Price to Public. The Price to Public will be determined by
negotiations among the Company and representatives of the Underwriters and may
not be indicative of the prices that prevail in the public market after the
completion of the Offering. Numerous factors, including announcements of
fluctuations in the Company's or its competitors' operating results, and
market conditions for hospitality and vacation ownership industry stocks in
general, could have a significant impact on the future price of the Common
Stock. In addition, the stock market in recent periods has experienced
significant price and volume fluctuations that often have been unrelated or
disproportionate to the operating performance of listed companies. These broad
fluctuations may adversely affect the market price of the Common Stock. See
"Underwriting."

ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Articles of Incorporation and By-Laws,
as well as provisions of the Florida Business Corporation Act (the "FBCA"),
may be deemed to have anti-takeover effects and may delay, defer or prevent a
takeover attempt that a shareholder might consider to be in the shareholder's
best interest. For example, such provisions may deter tender offers for shares
of Common Stock, or deter purchases of large blocks of shares of Common Stock,
thereby limiting the opportunity for the Company's shareholders to receive a
premium for their shares of Common Stock over then-prevailing market prices.
These provisions include the following:

Staggered Board of Directors. The Board of Directors of the Company will
consist of three classes of directors. The initial terms of the first,
second and third classes of directors will expire in 1998, 1999 and 2000,
respectively, and directors for each class will be elected for a three-year
term upon expiration of the term of the directors in such class. In
addition, the affirmative vote of two-thirds of the outstanding shares of
Common Stock is required to remove a director. These provisions may have
the effect of increasing the difficulty of one or more shareholders of the
Company to elect directors of their choice to the Board of Directors of the
Company or to remove a director.

Preferred Stock. Upon completion of the Offering, the Board of Directors
will have the authority to issue up to 5,000,000 shares of preferred stock
and to determine the price, rights (including voting rights), preferences,
privileges and restrictions of those shares without any vote of or action
by the shareholders. The rights of the holders of the Common Stock will be
subject to, and may be adversely affected by, the rights of the holders of
any preferred stock that may be issued in the future. The issuance of the
preferred stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could make it more
difficult for a party to acquire a majority of the outstanding voting stock
of the Company. The Company has no present plan to issue any shares of
preferred stock. See "Description of Capital Stock."

Florida Business Corporation Act. Florida law contains provisions that
may have the effect of delaying, deferring or preventing a non-negotiated
merger or other business combination involving the Company. These
provisions are intended to encourage any person interested in acquiring the
Company to negotiate with and obtain the approval of the Company's Board of
Directors in connection with the proposed transaction. Certain of these
provisions may, however, discourage a future acquisition of the Company not
approved by the Board of Directors in which shareholders might receive an
enhanced value for their shares, even though a substantial number or
majority of the Company's shareholders might believe the acquisition is in
their best interest. As a result, shareholders who desire to participate in
such a transaction may not have the opportunity to do so. Such provisions
could also discourage bids for the shares of Common Stock at a premium as
well as create a depressive effect on the market price of the shares of
Common Stock. See "Description of Capital Stock."

DILUTION; DIVIDENDS

Purchasers of Common Stock in the Offering will experience immediate
dilution in net tangible book value per share of Common Stock of $9.51 from
the Price to Public. See "Dilution." In addition, the Company does

not anticipate that it will pay any dividends on its Common Stock in the
foreseeable future. See "Dividend Policy."

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

Upon completion of the Offering, the Company will have outstanding an
aggregate of 18,800,000 shares of Common Stock, excluding shares of Common
Stock issuable upon exercise of options. The shares of Common Stock offered
hereby will be freely tradeable (other than by an "affiliate" of the Company
as such term is defined in the Securities Act) without restriction or
registration under the Securities Act. The sale of a substantial number of
shares of Common Stock, or the perception that such a sale might occur, could
adversely affect prevailing market prices of the Common Stock. The Company is
unable to make any prediction as to the effect, if any, that future sales of
Common Stock or the availability of shares of Common Stock for sale may have
on the market price of the Common Stock prevailing from time to time. In
addition, any such sale or such perception could make it more difficult for
the Company to sell equity securities or equity-related securities in the
future at such time and price as the Company deems appropriate. All remaining
outstanding shares of Common Stock may be sold under Rule 144 promulgated
under the Securities Act, subject to holding period, volume, manner of sale,
and other restrictions of Rule 144 and, in certain cases, subject to a one-
year lock-up agreement between the holder of such shares and the Underwriters.
See "Description of Capital Stock," "Shares Eligible for Future Sale" and
"Underwriting." In addition, at certain times commencing two years following
the completion of the Offering, certain shares of Common Stock (i) held by the
Existing Shareholders and (ii) purchased by certain employees of the Company
pursuant to the exercise of options granted to such employees by the Existing
Shareholders may be sold in the public market pursuant to certain registration
statements which the Company is obligated to file with respect to such shares,
or pursuant to an exemption from registration. See "Shares Available for
Future Sale."

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 4,625,000 shares of
Common Stock offered by the Company hereby, based on an estimated Price to
Public of $13.00 per share, after deducting underwriting discounts and
commissions and anticipated expenses of the Offering, are estimated to be
$53.8 million ($63.8 million, if the Underwriters' over-allotment option is
exercised in full and the shares of Common Stock sold pursuant thereto are not
sold by the Selling Shareholders). The Company will not receive any of the
proceeds from the sale of Common Stock by the Selling Shareholders. The
Company intends to use approximately (i) $39.3 million of the proceeds to
repay outstanding indebtedness and accrued interest (including $0.3 million of
prepayment penalties); and (ii) $14.5 million of the proceeds to pay for the
acquisition, development and expansion of existing and future vacation
ownership resorts and for working capital and general corporate purposes.
Pending such uses, the Company will invest the proceeds in commercial paper,
bankers' acceptances, other short-term investment-grade securities and money-
market accounts.

Indebtedness to be repaid out of the proceeds to the Company from the
Offering bears interest at rates currently ranging between approximately 10.3%
and 11.1% per annum and will mature at various times over the next five years
(except for indebtedness incurred to finance customer mortgages receivable,
which amortizes based upon the collection of the underlying customer mortgages
receivable and finally matures seven years from the date of the Company's last
borrowing under such facility). Indebtedness to be repaid that was incurred
within the last year was incurred for financing of customer mortgages
receivable, development of vacation ownership resorts and general corporate
purposes. None of the net proceeds from the Offering will be used to pay any
delinquent indebtedness.

DIVIDEND POLICY

Although certain of the Affiliated Companies have paid dividends in the past
and will make a tax-related distribution to the Existing Shareholders
immediately prior to the consummation of the Formation Transactions, the
Company has never declared or paid any dividends on its capital stock. See
"Prior Income Tax Status and Planned Distributions." The Company does not
anticipate declaring or paying cash dividends on its Common Stock in 1997 or
in the foreseeable future. The Company currently intends to retain future
earnings to finance its operations and fund the growth of its business. Any
payment of future dividends will be at the discretion of the Board of
Directors of the Company and will depend upon, among other things, the
Company's earnings, financial condition, capital requirements, level of
indebtedness, contractual restrictions in respect of the payment of dividends
and other factors that the Company's Board of Directors deems relevant.

CAPITALIZATION

The following table sets forth, as of December 31, 1996, the consolidated
capitalization of the Company on an actual basis and as adjusted to give
effect to (i) the payment of the $2.5 million distribution described in "Prior
Income Tax Status and Planned Distributions;" (ii) the consummation of the
Formation Transactions; (iii) the sale of the Common Stock offered by the
Company hereby; and (iv) the application of the estimated net proceeds to the
Company therefrom. This table should be read in conjunction with the
historical financial statements of the Company and the related notes thereto
included elsewhere in this Prospectus. See "Use of Proceeds," "Selected
Combined Historical Financial Information" and "Pro Forma Combined Financial
Information."

AS OF DECEMBER 31, 1996
--------------------------------
ACTUAL AS ADJUSTED
-------------- -----------------
(UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS)

Debt:
Notes and mortgages payable to financial
institutions(1).............................. $ 118,557 $ 79,586
-------------- --------------
Total....................................... 118,557 79,586
-------------- --------------
Shareholders' Equity:
Preferred Stock, $.01 par value, 5,000,000
shares authorized, none issued and outstand-
ing.......................................... -- --
Common Stock, $.01 par value, 100,000,000
shares authorized, 18,800,000 shares issued
and outstanding(2)........................... -- 188
Additional paid-in capital.................... -- 65,760
-------------- --------------
Total shareholders' equity.................... 26,648 65,948
-------------- --------------
Total capitalization........................ $ 145,205 $ 145,534
============== ==============

- --------
(1) Includes notes collateralized by customer mortgages receivable.
(2) Does not include an aggregate of 535,000 shares of Common Stock issuable
pursuant to existing options granted pursuant to the Stock Plan,
additional shares of Common Stock issuable upon exercise of options which
may be granted under the Stock Plan concurrently with completion of the
Offering and up to 832,500 shares of Common Stock which the Underwriters
may purchase from the Company pursuant to an exercise of their over-
allotment option (in the event that the shares of Common Stock subject
thereto are not sold by the Selling Shareholders). See "Management--Stock
Plan" and "Underwriting."

PRIOR INCOME TAX STATUS AND PLANNED DISTRIBUTIONS

Prior to the consummation of the Formation Transactions, each of the
Affiliated Companies which is a corporation elected to be taxed pursuant to
Subchapter S of the Code, and each of the Affiliated Companies which is a
partnership was taxable pursuant to Subchapter J of the Code. Accordingly, as
of the date of this Prospectus, none of such Affiliated Companies was subject
to federal or state income taxes, and all taxable income of such Affiliated
Companies was taxed directly at the shareholder or partner level. Prior to the
consummation of the Formation Transactions, the practice of each of such
Affiliated Companies has been to pay cash distributions to its owners,
consisting of the Existing Shareholders, to enable such owners to pay federal
and state taxes on the taxable income of the Affiliated Company. Consistent
with this past practice, immediately prior to the consummation of the
Formation Transactions, the Affiliated Companies intend to pay aggregate
distributions to their owners of approximately $0.3 million, representing the
balance of such owners' federal and state income tax liability attributable to
taxable income of the Affiliated Companies for the year ended December 31,
1996 and the aggregate estimated federal and state income taxes payable by
such owners in respect of the Affiliated Companies' income from January 1,
1997 through the consummation of the Formation Transactions. In addition,
immediately prior to the consummation of the Formation Transactions, the
Affiliated Companies intend to pay aggregate distributions of approximately
$2.2 million, representing retained earnings of the Affiliated Companies for
which the owners thereof have previously paid income tax. Of the approximately
$2.5 million aggregate distribution to be paid prior to the consummation of
the Formation Transactions, (i) approximately $1.25 million will be
distributed to trusts for the benefit of Mr. Gellein, his family members and
former spouse, and (ii) approximately $1.25 million will be distributed to
trusts for the benefit of Mr. Adler and his family members.

Following the consummation of the Formation Transactions, none of the
Affiliated Companies which is a corporation will be eligible to be taxed
pursuant to Subchapter S of the Code and the Subchapter S status of each of
such Affiliated Companies will terminate. Accordingly, the Company will be
liable for income taxes relating primarily to the Company's historical use of
the installment method of reporting for income tax purposes with respect to
the sale of Vacation Ownership Interests and other timing differences, which
will be reflected as deferred taxes on the Company's consolidated balance
sheet. Assuming the Formation Transactions had occurred on January 1, 1997,
such deferred tax liability would have been approximately $10.8 million
resulting from the use of the installment method of reporting for income tax
purposes and other timing differences. Such liability would not have been
payable until the installment payments on customer mortgages receivable from
customers are received by the Company. See "Pro Forma Combined Financial
Information" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

DILUTION

After giving effect to the payment of the approximately $2.5 million
distribution described in "Prior Income Tax Status and Planned Distributions"
and the consummation of the Formation Transactions, the pro forma net tangible
book value of the Company at December 31, 1996 was approximately $13.0
million, or $0.69 per share of Common Stock. Pro forma net tangible book value
per share of Common Stock represents the Company's total tangible assets less
its total liabilities, divided by the total number of outstanding shares of
Common Stock. Without taking into account any other changes in net tangible
book value after December 31, 1996, other than the sale by the Company of the
4,625,000 shares of Common Stock offered hereby (and the deduction of the
underwriting discounts and commissions) and other estimated offering expenses,
the application of the estimated net proceeds therefrom and the distribution
referred to above, the net tangible book value of the Company at December 31,
1996, would have been approximately $65.6 million, or $3.49 per share of
Common Stock. This represents an immediate increase in net tangible book value
of $2.80 per share to the Existing Shareholders and an immediate dilution in
net tangible book value of $9.51 per share to purchasers of Common Stock in
the Offering. The following table illustrates this dilution on a per share
basis:

Assumed initial public offering price per share of Common
Stock (at the mid-point of the estimated pricing range)... $13.00(1)
Pro forma net tangible book value per share of Common
Stock as of
December 31, 1996....................................... $0.69
Increase in net tangible book value per share of Common
Stock attributable to the Offering...................... $2.80
-----
Pro forma net tangible book value per share of Common Stock
after the Offering........................................ $3.49
------
Dilution per share of Common Stock to purchasers of Common
Stock in the Offering..................................... $9.51
======

- --------
(1) Before deduction of estimated underwriting discounts and commissions, and
expenses of the Offering to be paid by the Company.

The following table sets forth, as of December 31, 1996, after giving effect
to the Formation Transactions and the Offering, the number of shares of Common
Stock purchased, the total consideration paid therefor and the average price
paid per share of Common Stock by the Existing Shareholders and the purchasers
of Common Stock in the Offering, respectively. The following table does not
give effect to an aggregate of 535,000 shares of Common Stock issuable
pursuant to existing options and does not include up to 832,500 shares of
Common Stock which the Underwriters may purchase from the Company and/or the
Selling Shareholders pursuant to an exercise of their over-allotment option.
To the extent that any of such options are exercised, there will be further
dilution to purchasers of Common Stock in the Offering. See "Management--Stock
Plan" and "Underwriting."

SHARES PURCHASED TOTAL CONSIDERATION
--------------------- -------------------
AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- -------------

Existing
Shareholders(1)........ 14,175,000(2) 75.4% $ 268,300 -- % $ 0.02
New investors(3)........ 4,625,000 24.6% $60,125,000 100.0% $13.00
---------- ----- ----------- -----
Total................. 18,800,000 100.0% $60,393,300 100.0%
========== ===== =========== =====

- --------
(1) Existing Shareholders of the Company who received shares of Common Stock
pursuant to the Formation Transactions.
(2) Sales of Common Stock by the Existing Shareholders in the Offering will
cause the number of shares of Common Stock held by the Existing
Shareholders to be reduced to 13,250,000 shares, or 70.5% of the total
shares of Common Stock to be outstanding after the Offering, and will
increase the number of shares held by new investors to 5,550,000 shares,
or 29.5% of the total number of shares to be outstanding after the
Offering. See "Principal and Selling Shareholders."

(3) Purchasers of Common Stock sold by the Company in the Offering.

SELECTED COMBINED HISTORICAL FINANCIAL INFORMATION

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE AND OPERATING DATA)

The following table sets forth selected combined historical financial
information for the years ended December 31, 1992, 1993, 1994, 1995 and 1996.
The selected combined historical financial information (excluding "Operating
Data") for the three years ended December 31, 1996 was derived from the
Company's Combined Financial Statements, which were audited by KPMG Peat
Marwick LLP, independent auditors, whose report with respect to the three-year
period ended December 31, 1996, together with such combined financial
statements appears elsewhere herein. The selected combined historical
financial information for the year ended December 31, 1993 was derived from
audited financial statements of the Company not included herein. The selected
combined historical financial information for the year ended December 31, 1992
has been derived from unaudited financial statements prepared by the Company.

The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical combined financial statements of the Company
and Notes thereto appearing elsewhere in this Prospectus.

HISTORICAL
-------------------------------------------
YEAR ENDED
DECEMBER 31,
-------------------------------------------
1992 1993 1994 1995 1996
-------- -------- -------- -------- -------

STATEMENT OF OPERATIONS:
REVENUES:
Vacation Ownership Interest
sales........................... $ 48,503 $ 55,658 $ 54,186 $ 50,156 $60,063
Interest......................... 4,662 5,096 7,654 12,886 15,546
Resort........................... 9,977 10,877 11,834 12,613 13,587
Telecommunications............... 1,703 1,980 3,378 4,802 7,054
Other............................ 489 551 584 652 686
-------- -------- -------- -------- -------
Total revenues..................... 65,334 74,162 77,636 81,109 96,936
-------- -------- -------- -------- -------
COSTS AND OPERATING EXPENSES:
Vacation Ownership Interest cost
of sales........................ 10,254 11,521 11,391 12,053 14,595
Sales and marketing.............. 17,689 21,866 22,872 22,318 27,877
Loan portfolio
Interest expense--treasury..... 1,556 2,070 3,605 6,516 6,865
Provision for doubtful
accounts...................... 3,405 3,903 3,803 3,522 4,271
Resort........................... 8,594 9,493 10,037 10,585 11,089
Telecommunications............... 1,358 1,537 2,520 3,654 5,613
General and administrative....... 6,628 7,419 7,988 6,979 7,873
Depreciation and amortization.... 875 875 1,392 2,215 2,553
Interest expense--other.......... 2,523 2,269 2,106 3,168 4,154
Other............................ 1,688 1,318 1,241 1,020 443
Deferred executive incentive
compensation.................... 402 380 332 3,448 1,114
-------- -------- -------- -------- -------
Total costs and operating
expenses.......................... 54,972 62,651 67,287 75,478 86,447
-------- -------- -------- -------- -------
Operating income................... 10,362 11,511 10,349 5,631 10,489
Excess value recognized.......... 1,151 701 365 219 105
-------- -------- -------- -------- -------
Pretax income...................... 11,513 12,212 10,714 5,850 10,594
Provision for taxes.............. -- -- -- -- --
-------- -------- -------- -------- -------
Net income......................... $ 11,513 $ 12,212 $ 10,714 $ 5,850 $10,594
======== ======== ======== ======== =======

HISTORICAL
------------------------------------------------
YEAR ENDED
DECEMBER 31,
------------------------------------------------
1992 1993 1994 1995 1996
-------- -------- -------- -------- --------

CASH FLOW DATA:
EBITDA(a)................... $ 15,316 $ 16,725 $ 17,452 $ 15,468 $ 21,304
Cash flow provided by (used
in):
Operating activities...... $ 17,544 $ 10,602 $ 13,215 $ 12,524 $ 15,629
Investing activities...... $(21,244) $(20,444) $(20,383) $(22,651) $(26,351)
Financing activities...... $ 3,410 $ 11,085 $ 6,512 $ 15,131 $ 9,313
OPERATING DATA:
Number of resorts at year
end ....................... 2 2 2 2 3
Number of Vacation Ownership
Interests sold(b).......... 4,980 5,679 5,582 5,190 5,794
Number of Vacation Ownership
Interests in inventory at
year end(c)................ 1,967 3,781 3,822 3,054 14,774
Average price of Vacation
Ownership Interest sold.... $ 9,740 $ 9,801 $ 9,707 $ 9,664 $ 10,366
BALANCE SHEET DATA (AT YEAR
END):
Cash (including restricted
cash)...................... $ 3,779 $ 5,215 $ 4,864 $ 10,788 $ 9,981
Total assets................ $ 73,827 $ 99,431 $117,989 $140,651 $173,922
Long-term debt.............. $ 45,650 $ 57,474 $ 64,769 $101,504 $118,557
Shareholders' equity........ $ 12,254 $ 23,726 $ 33,658 $ 17,904 $ 26,648

- --------

(a) As shown below, EBITDA represents net income before interest expense,
income taxes, depreciation and amortization and excess value recognized
which reflects the amortization of the difference between the fair value
of the Company at the time of its purchase by Messrs. Gellein and Adler,
and a third individual, less the purchase price paid to acquire the
Company. EBITDA does not represent cash flows from operations and should
not be considered to be an alternative to net income as an indicator of
operations performance or to cash flows from operations as a measure of
liquidity. In addition, the Company's presentation of EBITDA could differ
from similar presentations prepared by other companies. Management
believes that EBITDA represents a useful measure to evaluate the Company's
results of operations without reference to its capitalization and tax
structure. Management also believes EBITDA is a useful indicator of the
Company's ability to service and/or incur indebtedness because it adjusts
net income for non-cash expenditures, taxes and existing interest
expenses. Management believes that the trends depicted by the changes in
EBITDA set forth below demonstrate the Company's use of borrowing and the
resultant increase in interest expense associated with its growth. The
following table reconciles EBITDA to net income:

YEAR ENDED
DECEMBER 31,
-------------------------------------------
1992 1993 1994 1995 1996
------- ------- ------- ------- -------

Net Income.................... $11,513 $12,212 $10,714 $ 5,850 $10,594
Interest expense--treasury.... 1,556 2,070 3,605 6,516 6,865
Interest expense--other....... 2,523 2,269 2,106 3,168 4,154
Taxes......................... 0 0 0 0 0
Depreciation and
amortization................. 875 875 1,392 2,215 2,553
Amortization of discount on
customer mortgages
receivable................... 0 0 0 (2,062) (2,757)
Excess value recognized....... (1,151) (701) (365) (219) (105)
------- ------- ------- ------- -------
EBITDA........................ $15,316 $16,725 $17,452 $15,468 $21,304
======= ======= ======= ======= =======

(b) Includes both annual and alternate-year Vacation Ownership Interests.
(c) Inventory classified as annual Vacation Ownership Interests.

PRO FORMA COMBINED FINANCIAL INFORMATION

The following unaudited pro forma combined financial information is based on
the historical financial statements of the Company and has been prepared to
illustrate the effect of the consummation of the Formation Transactions, the
application of the net proceeds of the Offering to the Company as set forth
under "Use of Proceeds" and planned distributions to Existing Shareholders
prior to the Formation Transactions as if they had occurred at the beginning
of the periods presented for the pro forma combined statements of operations
for the year ended December 31, 1996 and as of December 31, 1996 with respect
to the pro forma balance sheet. The pro forma combined financial information
does not purport to represent what the Company's financial position and
results of operations would actually have been if such transactions had in
fact occurred on such dates. The pro forma adjustments are based on currently
available information and upon certain assumptions that management believes
are reasonable under current circumstances. The pro forma combined financial
information and accompanying notes should be read in conjunction with the
Combined Financial Statements and related Notes thereto, and other financial
information pertaining to the Company included in "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

PRO FORMA COMBINED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1996
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

DECEMBER 31, 1996
------------------------------------
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------

STATEMENT OF OPERATIONS:
Revenues:
Vacation Ownership Interest sales...... $ 60,063 $ -- $ 60,063
Interest............................... 15,546 -- 15,546
Resort................................. 13,587 -- 13,587
Telecommunications..................... 7,054 -- 7,054
Other.................................. 686 -- 686
---------- --------- ----------
Total revenues........................... 96,936 -- 96,936
---------- --------- ----------
Costs and operating expenses:
Vacation Ownership Interests cost of
sales................................. 14,595 -- 14,595
Sales and marketing.................... 27,877 -- 27,877
Loan portfolio:
Interest expense--treasury........... 6,865 (961)(a) 5,904
Provision for doubtful accounts...... 4,271 -- 4,271
Resort................................. 11,089 -- 11,089
Telecommunications..................... 5,613 -- 5,613
General and administrative............. 7,873 -- 7,873
Depreciation and amortization.......... 2,553 (258)(a) 2,295
Interest expense--other................ 4,154 (3,189)(a) 965
Other.................................. 443 -- 443
Deferred executive incentive
compensation.......................... 1,114 -- 1,114
---------- --------- ----------
Total costs and operating expenses....... 86,447 (4,408) 82,039
---------- --------- ----------
Operating income......................... 10,489 4,408 14,897
Excess value recognized................ 105 -- 105
---------- --------- ----------
Pretax income............................ 10,594 4,408 15,002
Pro forma provision for income taxes... -- 5,382(b) 5,382
---------- --------- ----------
Net income(c)............................ $ 10,594 $ (974) $ 9,620
========== ========= ==========
Pro forma net income per share of Common
Stock................................... $ 0.75 -- $ 0.51
Pro forma weighted average shares of
Common Stock outstanding................ 14,175,000 4,625,000 (d) 18,800,000

- --------

(a) Reflects the effect on 1996 historical statement of operations data of the
issuance of common stock on January 1, 1996, and the reduction of interest
expense and elimination of related amortization of prepaid financing fees,
with the expected early retirement of $39.0 million of term debt.

(b) Reflects the effect on 1996 historical statement of operations data
referred to in note (a) and assumes the combined Company had been treated
as a C corporation rather than the treatment of the Affiliated Companies
as S corporations and limited partnerships for federal income tax
purposes.
(c) For financial reporting purposes, the Company will incur an extraordinary
loss relating to the early termination of debt aggregating $0.8 million
net of pro forma income taxes of $0.5 million. Such amount is not included
in the above pro forma adjustments.
(d) Reflects the Offering of 4,625,000 shares of Common Stock by the Company.

The selected combined pro forma balance sheet data set forth below as of
December 31, 1996 give effect to the Formation Transaction, the Offering and
the planned distribution to the Existing Shareholders prior to the Formation
Transactions, as if each had occurred on December 31, 1996. The pro forma
adjustments are based upon currently available information and certain
assumptions that management of the Company believes are reasonable under
current circumstances.

COMBINED PRO FORMA BALANCE SHEET

DECEMBER 31, 1996
(DOLLAR AMOUNTS IN THOUSANDS)

DECEMBER 31, 1996
--------------------------------
PRO FORMA AS
ACTUAL ADJUSTMENTS ADJUSTED
-------- ----------- --------

ASSETS:
Cash.......................................... $ 6,134 $ 53,766 (a) $ 18,112
(38,971)(b)
(317)(c)
(2,500)(d)
Restricted cash............................... 3,847 -- 3,847
Customer mortgages receivable, net............ 100,166 -- 100,166
Other receivables, net........................ 4,111 -- 4,111
Inventory of Vacation Ownership Interests..... 16,541 -- 16,541
Construction in progress...................... 8,670 -- 8,670
-------- --------
Total Vacation Ownership Interests........ 25,211 -- 25,211
-------- --------
Prepaid expenses and other assets............. 13,978 (879)(e) 13,099
Land held for development..................... 8,080 -- 8,080
Property and equipment, net................... 12,395 -- 12,395
-------- -------- --------
Total assets.............................. $173,922 $ 11,099 $185,021
======== ======== ========
LIABILITIES:
Accounts payable and accrued liabilities...... $ 3,828 -- $ 3,828
Accrued compensation and benefits............. 9,291 -- 9,291
Customer deposits............................. 4,995 -- 4,995
Other liabilities............................. 6,160 -- 6,160
Deferred tax liability........................ -- 10,770 (f) 10,770
Notes and mortgages payable................... 118,557 (38,971)(b) 79,586
-------- -------- --------
Total liabilities......................... 142,831 (28,201) 114,630
-------- -------- --------
Minority interest............................. 4,443 -- 4,443
Equity........................................ 26,648 53,766 (a) 65,948
-------- --------
(317)(c)
(879)(e)
(10,770)(f)
(2,500)(d)
--------
Total liabilities and equity.............. $173,922 $ 11,099 $185,021
======== ======== ========

- --------
(a) Reflects proceeds of $60,125 from the Offering net of related expenses of
$6,359.
(b) Represents repayment of notes and mortgages payable to financial
institutions.

(c) Represents penalties associated with the prepayment of certain notes
payable retired with a portion of the proceeds of the Offering.
(d) Reflects anticipated $2,500 in distributions to Existing Shareholders
prior to the Formation Transactions.
(e) Reflects the write-off of prepaid financing fees related to be the notes
and mortgages payable to financial institutions.
(f) Reflects the establishment of deferred tax liability due to the change in
the Company's tax status to a C corporation.

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company was organized in December 1996 to combine the ownership of the
vacation ownership resort acquisition, development and management businesses
conducted by the Company's corporate and partnership predecessors. The Company
generates revenues from the sale and financing of annual and alternate-year
Vacation Ownership Interests at its resorts, which typically entitle the
purchaser to ownership of a fully-furnished unit for a one-week period, on
either an annual or alternate-year basis, respectively. For purposes of the
following discussion, sales of Vacation Ownership Interests reflect sales of
both annual Vacation Ownership Interests and alternate-year Vacation Ownership
Interests each as a sale of a single Vacation Ownership Interest. The Company
generates additional revenues from resort operations, which include room
rental operations and auxiliary resort operations such as food and beverage
sales, and from management fees and telecommunications services provided by
the Company at its resorts and limited telecommunications design and
installation services provided for third parties.

The Company recognizes revenues attributable to sales of Vacation Ownership
Interests on an accrual basis after the execution of a binding sales contract
between the Company and the purchaser, receipt by the Company of a down
payment of at least 10% of the sales price and the expiration of any
applicable statutory rescission period. The Company has not traditionally sold
Vacation Ownership Interests prior to completion of construction; however, if
the Company sells Vacation Ownership Interests prior to completion of
construction in the future, the Company intends to recognize such sales in
accordance with the percentage of completion method in addition to the factors
identified above. Costs associated with the acquisition and development of
vacation ownership resorts, including carrying costs such as interest and
taxes, are generally capitalized and subsequently recorded as a cost of sales
as the related revenues are recognized.

The Company, through its predecessor corporations and partnerships, has
operated in the vacation ownership industry since 1980. In December 1986, the
Company was sold to a corporate acquiror. In November 1991, Messrs. Gellein
and Adler, together with a third individual, acquired the Company from the
corporate acquiror. In May 1995, the Company purchased (the "Executive
Repurchase") the entire interest in the Company held by the third individual,
who was a shareholder/executive of the Company. Also in May and September
1995, the Company redeemed options (the "Option Redemption") to purchase
interests in the partnerships which operate Vistana Resort and Vistana's Beach
Club, which were held by two institutions who had purchased receivables from
the Company. Together, the Executive Repurchase and the Option Redemption
affected the financial results in that the Company incurred additional debt to
finance the Executive Repurchase and the Option Redemption. Additionally, in
connection with the Executive Repurchase, the Company paid its former
shareholder/executive for a five-year covenant-not-to-compete, which is being
amortized through April 2000.

RESULTS OF OPERATIONS

The following discussion of results of operations relates to entities
comprising the Company on a combined historical basis. Results of operations
only reflect operations of entities in existence for each respective reporting
year. The following table sets forth certain combined operating information
for the entities comprising the Company for the three years ended December 31,
1994, 1995 and 1996.

YEARS ENDED
DECEMBER 31
-----------------------
1994 1995 1996
------ ------ -------

STATEMENT OF OPERATIONS:
AS A PERCENTAGE OF TOTAL REVENUES
Vacation Ownership Interest sales.................... 69.8% 61.8% 62.0%
Interest revenue..................................... 9.9% 15.9% 16.0%
Resort revenue....................................... 15.2% 15.6% 14.0%
Telecommunications revenue........................... 4.4% 5.9% 7.3%
Other................................................ 0.7% 0.8% 0.7%
------ ------ -------
Total revenues..................................... 100.0% 100.0% 100.0%
====== ====== =======
AS A PERCENTAGE OF VACATION OWNERSHIP INTEREST SALES
Vacation Ownership Interest cost of sales............ 21.0% 24.0% 24.3%
Sales and marketing.................................. 42.2% 44.5% 46.4%
Provision for doubtful accounts...................... 7.0% 7.0% 7.1%
AS A PERCENTAGE OF INTEREST REVENUES
Interest expense--treasury........................... 47.1% 50.6% 44.2%
AS A PERCENTAGE OF TOTAL REVENUES
General and administrative........................... 10.3% 8.6% 8.1%
Depreciation and amortization........................ 1.8% 2.7% 2.6%
Interest expense--other.............................. 2.7% 3.9% 4.3%
Other................................................ 1.6% 1.3% 0.5%
Total costs and operating expenses................. 86.7% 93.1% 89.2%
AS A PERCENTAGE OF RESORT REVENUES
Resort expenses(1)................................... 84.8% 83.9% 81.6%
AS A PERCENTAGE OF TELECOMMUNICATIONS REVENUES
Telecommunications expenses(1)....................... 74.6% 76.1% 79.6%
SELECTED OPERATING DATA:
Number of resorts at year end........................ 2 2 3
Number of Vacation Ownership Interests sold(2)....... 5,582 5,190 5,794
Number of Vacation Ownership Interests in inventory
at year end(3)...................................... 3,822 3,054 14,774
Average price of Vacation Ownership Interests sold... $9,707 $9,664 $10,366

- --------
(1) Does not include interest and depreciation expenses.

(2) Includes both sales of annual and alternate-year Vacation Ownership
Interests.
(3) Inventory classified as annual Vacation Ownership Interests.

Comparison of Year Ended December 31, 1996 to Year Ended December 31, 1995

For the year ended December 31, 1996, the Company recognized total revenues
of $96.9 million compared to $81.1 million for the year ended December 31,
1995, an increase of $15.8 million, or 19.5%. This increase is primarily the
result of a $9.9 million increase in sales of Vacation Ownership Interests
from $50.2 million during 1995 to $60.1 million during 1996, an increase of
19.8%. Sales of Vacation Ownership Interests increased primarily as a result
of (i) a 7.3% increase in the average sales price of Vacation Ownership
Interests, and (ii) an 11.6% increase in the number of Vacation Ownership
Interests sold from 5,190 to 5,794. The increase in Vacation Ownership
Interests sold was the result of the Company's marketing activities in central
Florida and a 94.1% increase in sales generated by the Company's
internationally-based marketing efforts which grew from $5.1 million in 1995
to $9.9 million in 1996.

Interest revenue increased 20.6% from $12.9 million to $15.5 million due to
an 18.7% increase in the principal amount of net customer mortgages receivable
from $80.5 million to $100.2 million, and an increased

average contractual yield on the Company's customer mortgages receivable
portfolio from 13.9% to 14.4%. Also included in interest revenue, discount
amortization recognized on customer mortgages receivable increased 38.1% from
$2.1 million to $2.8 million as the Company recognized discount amortization
for the full period in 1996, as compared to a portion of the period in 1995.
This discount resulted from a 1995 transaction in which the Company re-
acquired customer mortgages receivable (pursuant to a related clean-up call
provision pertaining to the original transaction) which had been previously
sold in 1991 as well as recognition of a discount on certain customer
mortgages receivable repurchased in 1996 (pursuant to a related clean-up call
provision pertaining to the original transaction) from an investment
partnership. As of December 31, 1996, $4.6 million of the unamortized discount
remained and is expected to be amortized over the next four years.

Resort revenues increased 7.7%, from $12.6 million to $13.6 million, as a
result of increased room rentals and retail operations at Vistana Resort in
Orlando. Telecommunications revenues (guest telephone charges relating to the
existing resorts and revenues from contracting services provided to third
parties) increased 46.9%, from $4.8 million to $7.1 million, due to increased
telephone usage by resort guests and an increase in contracting revenues from
$3.5 million to $5.7 million.

Operating costs and expenses increased 14.5% from $75.5 million to $86.5
million, although, as a percentage of total revenues, operating costs and
expenses decreased from 93.1% in 1995 to 89.2% in 1996. Product costs,
telecommunications expenses and resort expenses increased at a rate
commensurate with or in excess of that of related revenues. Loan portfolio
costs, general and administrative expenses, and depreciation increased at
rates less than the rate by which revenues increased. Provision for doubtful
accounts remained relatively constant at 7.1% of revenues in 1996. The Company
annually monitors its provision for doubtful accounts to provide for future
losses associated with any defaults on customer mortgages receivable and
provides for additions to the reserve as a percentage of Vacation Ownership
Interests sold in the applicable period. Management believes that the
provision is adequate for such future losses. Interest expense-treasury
increased due to increased borrowings secured by customer mortgages
receivable. Depreciation and amortization increased at a rate lower than that
of total revenues reflecting the leveraging of these costs and assets over a
larger revenue base. In addition, operating costs and expenses decreased by
$2.3 million as a result of a decrease in the amount of deferred executive
incentive compensation.

Costs of sales as a percentage of Vacation Ownership Interest sales
increased from 24.0% in 1995 to 24.3% in 1996 reflecting a larger percentage
of Vacation Ownership Interests sold in 1996 compared to 1995 from a more
expensive phase at Vistana Resort in Orlando, resulting from a relatively
greater per unit cost for land and amenities than prior phases. The Company
expects to complete sales from this higher-cost phase in mid-1997 and in
future periods the Company expects later phases to have relatively lower costs
for land and amenities.

Sales and marketing expenses increased 24.9% from $22.3 million to $27.9
million. As a percentage of timeshare sales, these expenses increased from
44.5% to 46.4%. This increase is attributable to higher overall sales levels
as well as opening expenses associated with expanded international sales
facilities and the commencement of sales activities at Oak Plantation Villas
by Vistana during the fourth quarter of 1996.

General and administrative expenses increased 12.8% from $7.0 million to
$7.9 million. However, as a percentage of total revenues, these costs
decreased from 8.6% to 8.1%. Resort expenses as a percentage of resort
revenues decreased from 83.9% to 81.6% due to growth in management fee income
while telecommunications expenses as a percentage of telecommunications
revenues increased from 76.1% to 79.6% due to a higher mix of revenues from
contracting which carries a higher cost of sales.

Interest expense-treasury (consisting of interest paid on borrowings secured
by customer mortgages receivable) increased 5.4% from $6.5 million to $6.9
million. This increase reflects higher borrowings secured by customer
mortgages receivable to fund growth in the Company's operations and the
relatively higher interest income described above. However, as a percentage of
interest income, interest expense-treasury decreased from 50.6% to 44.2%.
Interest expense-other increased $1.0 million, or 31.1%, to $4.2 million in
1996 as a result of the impact for the full twelve months of the debt
associated with the Executive Repurchase and Option Redemption.

During 1995, the Company amended certain senior executives' employment
agreements, which increased deferred executive incentive compensation, on a
cumulative basis, from 1991 through 1995. As a result, deferred executive
incentive compensation decreased by 67.7% to $1.1 million in 1996 from $3.4
million in 1995. The Company intends to enter into new employment agreements
with its senior executives effective upon completion of the Offering and, as a
result, anticipates that there will be no equivalent expense after 1996. See
"Management--Employment Agreements."

Pre-tax income increased 81.1% from $5.9 million to $10.6 million.

Comparison of Year Ended December 31, 1995 to Year Ended December 31, 1994.

For the year ended December 31, 1995, the Company recognized total revenues
of $81.1 million compared to $77.6 million for the year ended December 31,
1994, an increase of $3.5 million or 4.5%. Such increase is primarily due to
higher interest revenue, telecommunications revenue and resort revenue, which
offset a 7.4% decrease in revenues from sales of Vacation Ownership Interests
from $54.2 million to $50.2 million. The decrease in Vacation Ownership
Interests sold is primarily the result of a $4.8 million decrease in sales
from the Company's marketing activities in central Florida.

Interest revenue increased 68.4%, from $7.7 million to $12.9 million, due to
a 25.7% increase in the principal amount of net customer mortgages receivable
from $64.0 million to $80.5 million. The year-end weighted average interest
rate on the customer mortgages receivable portfolio increased from 13.7% to
13.9% per annum. The Company also recognized additional interest revenue of
$2.1 million in 1995 as a result of the recognition of a discount amortization
on certain customer mortgages receivable repurchased (pursuant to a related
clean-up call provision pertaining to the original transaction) from an
investment partnership.

Resort revenues increased 6.6%, from $11.8 million to $12.6 million, as a
result of the increased number of rooms rented. Telecommunications revenues
increased by 42.2% from $3.4 million to $4.8 million. This increase is
primarily due to a $1.2 million increase in revenues derived from contracting
services provided to third parties.

Operating costs and expenses increased by 12.2% from $67.3 million to $75.5
million. As a percentage of total revenues, operating costs and expenses
increased from 86.7% to 93.1%. This increase is primarily attributable to a
$3.1 million increase in deferred executive incentive compensation expense
resulting from an amendment to certain senior executives' employment
agreements. Additionally, there was an increase in cost of sales of Vacation
Ownership Interests as a percentage of Vacation Ownership Interest sales from
21.0% to 24.0% due to (i) the commencement of sales of Vacation Ownership
Interests at a new phase at Vistana Resort, which had a corresponding greater
per unit land and amenity cost than prior phases, and (ii) an increased
percentage of sales of Vacation Ownership Interests at Vistana's Beach Club
(which have a lower average sales price per unit than those at Vistana Resort
and a higher product cost as a result of the high-rise nature of the
construction), from 8.5% of all Vacation Ownership Interests sold in 1994 to
16.1% in 1995 which carried a higher product cost.

Sales and marketing costs as a percentage of Vacation Ownership Interest
sales increased from 42.2% in 1994 to 44.5% in 1995, reflecting decreased
efficiencies of the Company's marketing activities in central Florida and
increased sales costs.

General and administrative costs decreased 12.6%, from $8.0 million to $7.0
million, due principally to a decrease in aggregate executive compensation and
related costs payable by the Company as a result of the Executive Repurchase.

Interest expense-treasury increased 80.7%, from $3.6 million to $6.5
million, due to an increase in hypothecation activities pursuant to which the
total amount of notes payable secured by customer mortgages receivable
increased from a year-end balance of $44.5 million in 1994 to a year-end
balance of $65.9 million in 1995. This increased borrowing funded a 14.9%
increase in inventory and units under construction during 1995,

from $15.9 million at December 31, 1994 to $18.3 million at December 31, 1995.
The Company's interest expense-other increased 50.4% from $2.1 million to $3.2
million. The increase in interest expense-other is attributable to
indebtedness incurred in connection with the Executive Repurchase and the
Option Redemption. Both interest expense-treasury and interest expense-other
increased in 1995 in part due to the full-year effect in 1995 of higher
interest rates which rose during 1994 and were sustained at higher levels
throughout 1995.

Resort expenses increased 5.5% from $10.0 million in 1994 to $10.6 million
in 1995. Telecommunications expenses increased 45.0% from $2.5 million in 1994
to $3.7 million in 1995, primarily as a result of an increase in the
percentage of costs attributable to contracting services provided to third
parties. These increases were consistent with the increases in resort and
telecommunications revenues, respectively.

Pre-tax income decreased 45.4%, from $10.7 million to $5.9 million.

LIQUIDITY AND CAPITAL RESOURCES

The Company generates cash for operations from the sale and financing of
Vacation Ownership Interests, resort operations, management activities and
telecommunications services. With respect to the sale of Vacation Ownership
Interests, the Company generates cash for operations from customer down
payments and third party financing of customer mortgages receivable in amounts
typically equal to 90% of the related customer mortgage receivable. The
Company generates additional cash from the financing of Vacation Ownership
Interests equal to the difference between the interest charged on the customer
mortgages receivable (which averaged 14.4% at December 31, 1996) and the
interest paid on the notes payable secured by the Company's pledge of such
customer mortgages receivable (which averaged 10.4% at December 31, 1996).

During the years ended December 31, 1996, 1995 and 1994, cash provided by
operating activities was $15.6 million, $12.5 million and $13.2 million,
respectively. Cash generated from operating activities was higher in 1996
resulting from an increase in net income. Cash generated from operating
activities was slightly lower in 1995 than 1994 due principally to a decrease
in net income which was offset, in large part, by increased accrued
liabilities.

Net cash used in investing activities for the years ended December 31, 1996,
1995 and 1994 was $26.4 million, $22.7 million and $20.4 million,
respectively. Pursuant to a 1992 agreement in which the Company agreed to sell
to third parties a stipulated volume of its customer mortgages receivable, the
Company completed such sales during 1993 and 1994. The Company has not entered
into any similar agreement since the 1992 agreement and does not anticipate
entering into any such agreement in the future. In 1996, the increase in
customer mortgages receivable was due to increased sales of Vacation Ownership
Interests.

For the years ended December 31, 1996, 1995 and 1994, net cash provided by
financing activities was $9.3 million, $15.1 million and $6.5 million,
respectively. The increase in proceeds from notes payable in 1995 funded the
increased level of equity distributions attributable to the Executive
Repurchase and the Option Redemption. The net cash figures for 1996 were lower
than 1995 primarily as a result of decreased borrowing activities and
recognition of the effect of minority interest. In addition, year-to-year net
cash provided from investing activities fluctuates as a result of the
Company's borrowing activities and its relative investment in land and related
Vacation Ownership Interest inventory.

The Company requires funds to finance the acquisition and development of
vacation ownership resorts and related inventory, and to finance customer
purchases of Vacation Ownership Interests. Historically, these funds have been
provided by indebtedness secured by a portion of the Company's inventory of
unsold Vacation Ownership Interests, customer mortgages receivable and other
assets. In addition, the Company incurred additional indebtedness in
connection with the Executive Repurchase and Option Redemptions. As of

December 31, 1996, the Company had $22.5 million outstanding under its notes
payable secured by its land and Vacation Ownership Interest inventory, $73.2
million outstanding under its notes payable secured by customer mortgages
receivable and $22.9 million of other secured and unsecured notes payable.
Upon completion of the Offering and the application of proceeds therefrom, the
Company anticipates that $20.0 million of the notes payable secured by
customer mortgages receivable will be repaid, as well as $19.0 million in
other indebtedness. As of December 31, 1996, the Company's scheduled principal
payments on its pro-forma long-term indebtedness through 2001 (excluding
payments on credit facilities secured primarily by customer mortgages
receivable) were $2.0 million in 1997, $1.4 million in 1998, $1.4 million in
1999, $1.1 million in 2000 and $0.7 million in 2001.

Over the next 12 months, the Company anticipates spending approximately $51
million for acquisition, expansion, conversion and development activities at
Vistana Resort, Oak Plantation Villas by Vistana, Vistana Resort at World Golf
Village, the Myrtle Beach Resort and PGA Vacation Resort by Vistana; however,
the exact amount of these expenditures will be dependent upon the size and
timing of the construction of the initial phases of each such resort. The
Company expects to fund its operations and development activities at its
existing resorts and the acquisition of new resorts with (i) cash flow from
operations; (ii) borrowings under existing credit facilities; (iii) the net
proceeds to the Company of the Offering (after repayment of certain
outstanding indebtedness); and (iv) borrowings under new credit facilities
which the Company intends to secure. As of December 31, 1996, the Company's
existing credit facilities had an available capacity of approximately $70.4
million, including credit facilities to fund customer financing, working
capital, and construction and development activities. The Company believes
that its available capacity under its existing credit facilities is sufficient
to meet its capital needs for at least the next 12 months.

The Company's current credit facilities (the "Credit Facilities") provide
for term loans, of which $48.7 million was outstanding as of December 31,
1996, and revolving lines of credit, under which the Company had borrowings of
$69.9 million as of December 31, 1996 and an available capacity at that date
of $70.4 million. As of December 31, 1996, the Company's term loans accrued
interest at various rates between 8.0% and 11.9%, and the Company's revolving
lines of credit accrued interest at rates between 9.75% and 10.25%.
Approximately $89.1 million of the Company's indebtedness bears interest at
variable rates based on a fixed spread over a specified prime rate. The
Company's indebtedness under the Credit Facilities is secured primarily by
pledges of the Company's receivables (including its customer mortgages
receivable), mortgages on the Company's unsold inventory of Vacation Ownership
Interests and other owned real and personal property. The terms of certain of
the Credit Facilities impose certain operating and financial restrictions upon
the Company, including, without limitation, (i) maintenance of a minimum
tangible net worth by certain of the Company's operating subsidiaries; (ii)
maintenance of certain financial ratios, including the ratio of selling
expenses to net Vacation Ownership Interest sales; and (iii) limitations on
cash distributions by certain of the Company's operating subsidiaries to the
amount of the subsidiary's net income or net cash flow (subject to certain
exceptions for tax and other permitted distributions). In addition, certain of
the Credit Facilities contain default provisions that are triggered in the
event that Messrs. Gellein and Adler (together with their respective
affiliates), collectively, fail to own at least a majority of the voting
securities of the borrowing subsidiary or any other corporation or partnership
which controls such subsidiary.

The Company intends to pursue a growth-oriented strategy; accordingly, the
Company may, from time to time acquire, among other things, additional
vacation ownership resorts and additional land upon which vacation ownership
resorts may be developed, and companies operating quality resorts or having
vacation ownership assets, management, sales or marketing expertise
commensurate with the Company's operations in the vacation ownership industry.
In this regard, the Company is currently considering the acquisition of
several additional land parcels for the development of additional resorts,
either under a non-multi-hotel brand, under the Vistana brand, one of Promus'
brands or the PGA Vacation Resort brand. See "Business--Affiliation with
Promus." The Company may also evaluate asset and operating company
acquisitions, but presently has no contracts or capital commitments relating
to any such potential acquisition.

In the future, the Company may negotiate additional credit facilities, or
issue debt or additional equity securities. Any debt incurred or issued by the
Company may be secured or unsecured, bear interest at fixed or variable rates,
and be subject to terms and conditions approved by management. The Company has
historically enjoyed good credit relationships and has been successful in
establishing new relationships and expanding existing credit facilities as its
growth and opportunities have necessitated. Management believes it will
continue to be able to borrow in this manner.

The Company believes that the net proceeds to the Company from the Offering,
together with cash generated from operations and future borrowings, will be
sufficient to meet the Company's working capital and capital expenditure needs
for the next 12 months. However, depending upon conditions in the capital and
other financial markets, and other factors, the Company may from time to time
consider the issuance of debt or other securities, the proceeds of which may
be used to finance acquisitions, to refinance debt or for general corporate
purposes. The Company believes that the Company's properties are adequately
covered by insurance. See "Business--Insurance."

INFLATION

Inflation and changing prices have not had a material impact on the
Company's revenues, operating income and net income during any of the
Company's three most recent fiscal years. Due to the current economic climate,
the Company does not expect that inflation and changing prices will have a
material impact on the Company revenues, operating income or net income. To
the extent inflationary trends affect short-term interest rates, a portion of
the Company's debt service costs may be affected as well as the rates the
Company charges on its customer mortgages.

SEASONALITY

The Company's revenues are moderately seasonal with owner and guest activity
the greatest from February through April and June through August. As the
Company expands into new markets and geographic locations it may experience
new seasonality dynamics creating fluctuations in operating results.

BUSINESS

COMPANY HISTORY

Founded in 1980, the Company is a leading developer and operator of
timeshare resorts in the United States. The Company's principal operations
consist of (i) acquiring, developing and operating vacation ownership resorts;
(ii) marketing and selling Vacation Ownership Interests in its resorts, either
on an annual or alternate-year basis; and (iii) providing financing for the
purchase of Vacation Ownership Interests at its resorts. The Company currently
operates three vacation ownership resorts in Florida with a total of 1,406
units, or 71,706 Vacation Ownership Interests, and is currently constructing a
fourth resort at World Golf Village, a destination golf resort and future home
of the World Golf Hall of Fame currently under development near St. Augustine,
Florida. In addition, the Company has entered into an exclusive joint venture
agreement with Promus, a leading hotel company in the United States, for the
joint development and operation of vacation ownership resorts in selected
North American markets. The Company has also entered into a letter of intent
with PGA of America for the development of golf-oriented vacation ownership
resorts.

The Company opened the first vacation ownership resort in Orlando, Florida,
which has become one of the largest vacation ownership markets in the world.
During its 16-year history, the Company has sold in excess of $550 million of
Vacation Ownership Interests and has an ownership base of over 49,000 owners
residing in more than 100 countries. Raymond L. Gellein, Jr., the Chairman and
Co-Chief Executive Officer, and Jeffrey A. Adler, the President and Co-Chief
Executive Officer, have been employed by the Company since 1980 and 1983,
respectively. Under their direction, the Company has focused on creating a
values-driven business culture that emphasizes excellence and quality
relationships with its employees, customers and business partners. Management
believes that these philosophies have been instrumental to the Company's
success. Messrs. Gellein and Adler serve as the chairman of the Florida
chapter of ARDA and as a director of ARDA, respectively.

The quality and customer appeal of the Company's resorts have been
recognized through industry awards and by several leading travel publications.
The Company's flagship resort, Vistana Resort in Orlando, contains 1,088 units
developed in seven phases on a 135-acre landscaped complex featuring swimming
pools, tennis courts, restaurants and other recreational amenities. In 1995
and 1996, Conde Nast Traveler magazine selected Vistana Resort as a "Gold
List" resort, the only vacation ownership resort to be included as one of the
top 500 resorts in the world. Similarly, the most recent Zagat Survey of U.S.
Hotels, Resorts & Spas ranked Vistana Resort as one of the top resorts in
Orlando, commenting that it contains the "most luxurious villas in Orlando."
Each of the Company's operating resorts is rated as a Gold Crown resort by
Resort Condominiums International ("RCI"), the operator of the world's largest
Vacation Ownership Interest exchange network, which was recently acquired by
HFS Incorporated. The Gold Crown distinction is reserved for approximately the
top 14% of the more than 3,000 vacation ownership resorts in the RCI network.

THE VACATION OWNERSHIP INDUSTRY

The Market. The resort component of the leisure industry is primarily
serviced by two alternatives for overnight accommodations: commercial lodging
establishments and vacation ownership resorts. Commercial lodging consists
principally of hotels and motels in which a room is rented on a nightly,
weekly or monthly basis for the duration of the visit and is supplemented by
rentals of privately-owned condominium units or homes. For many vacationers,
particularly those with families, a lengthy stay at a quality commercial
lodging establishment can be expensive and the space provided relative to the
cost is not economical. In addition, room rates at such establishments are
subject to change periodically and availability is often uncertain. For these
and other reasons, vacation ownership presents an economical and reliable
alternative to commercial lodging for many vacationers.

First introduced in Europe in the mid-1960s, vacation ownership has been one
of the fastest-growing segments of the hospitality industry during the past
two decades. In 1994 (the latest period for which ARDA information is
available), the industry experienced a record year, with 384,000 new owners
and purchases of 560,000 Vacation Ownership Interests resulting in a sales
volume of $4.76 billion (up from approximately $490 million in 1980). Based on
other industry information, the Company believes that vacation ownership sales

exceeded $5.0 billion in 1995. As shown in the following charts, the worldwide
vacation ownership industry has expanded significantly since 1980 both in
terms of the number of Vacation Ownership Interests sold and total sales
volume:

LOGO

[The following tables are represented as bar graphs]

Dollar Volume of Vacation Ownership Interest Sales
(in billions)

1 1980 $0.490
2 1981 $0.965
3 1982 $1.165
4 1983 $1.340
5 1984 $1.735
6 1985 $1.580
7 1986 $1.610
8 1987 $1.940
9 1988 $2.390
10 1989 $2.970
11 1990 $3.240
12 1991 $3.740
13 1992 $4.250
14 1993 $4.505
15 1994 $4.760

LOGO

Number of Vacation Ownership Interest Owners
(in millions)

1 1980 0.155
2 1981 0.220
3 1982 0.335
4 1983 0.470
5 1984 0.620
6 1985 0.805
7 1986 0.970
8 1987 1.125
9 1988 1.310
10 1989 1.530
11 1990 1.800
12 1991 2.070
13 1992 2.363
14 1993 2.760
15 1994 3.144

Source: American Resort Development Association, The 1995 Worldwide Timeshare
Industry.

In addition, the vacation ownership industry has experienced consistent and
steady growth from 1990 through 1994, achieving average annual growth rates of
approximately 10.2% in sales volume, 14.6% in number of owners and 8.4% in
number of Vacation Ownership Interests sold per year.

The Economics. The Company believes that national lodging and hospitality
companies are attracted to the vacation ownership concept because of the
industry's relatively low product cost and high profit margins and the
recognition that vacation ownership resorts provide an attractive alternative
to the traditional hotel-based vacation and allow the hotel companies to
leverage their brands into additional resort markets where demand exists for
accommodations beyond traditional rental-based lodging operations.

The Consumer. According to information compiled by ARDA for the year ended
December 31, 1994, the prime market for Vacation Ownership Interests consists
of individuals in the 40-55 year age range who are reaching the peak of their
earning power and are rapidly gaining more leisure time. The median age of a
Vacation Ownership Interest buyer at the time of purchase is 46. The median
annual household income of current Vacation Ownership Interest owners in the
United States is approximately $63,000, with approximately 35.0% of all
Vacation Ownership Interest owners having annual household income greater than
$75,000 and approximately 17.0% of such owners having annual household income
greater than $100,000. Despite the growth in the vacation ownership industry,
less than 2% of all United States households own a Vacation Ownership
Interest. As of December 31, 1994, Vacation Ownership Interest ownership had
achieved only an approximate 3.0% market penetration among United States
households with income above $35,000 per year and 3.9% market penetration
among United States households with income above $50,000 per year.
Approximately 52% of all owners of Vacation Ownership Interests reside in the
United States.

According to the ARDA study, the three primary reasons cited by consumers
for purchasing a Vacation Ownership Interest are (i) the ability to exchange
the Vacation Ownership Interest for accommodations at other resorts through
exchange networks such as RCI (cited by 82% of Vacation Ownership Interest
purchasers), (ii) the economic savings compared to traditional hotel resort
vacations (cited by 61% of purchasers) and (iii) the quality and appeal of the
resort at which they purchased a Vacation Ownership Interest (cited by 54% of
purchasers). According to the ARDA study, Vacation Ownership Interest buyers
have a high rate of repeat purchases. Approximately 41% of all Vacation
Ownership Interest owners own more than one Vacation Ownership Interest which
represent approximately 65% of the industry inventory, and approximately 51%
of all owners who bought their first Vacation Ownership Interest before 1985
have since purchased a second Vacation Ownership Interest. In addition, the
ARDA study noted that customer satisfaction generally increases with length of
ownership, age, income, multiple location ownership and access to Vacation
Ownership Interest exchange networks.

The Company believes it is well-positioned to take advantage of these
demographic trends because of the location and quality of its resorts, the
average sales price of its Vacation Ownership Interests and the participation
of its resorts in RCI. The Company expects the vacation ownership industry to
continue to grow as the baby-boom generation continues to enter the 40-55 year
age bracket, the age group which contained the most Vacation Ownership
Interest purchasers in 1994.

GROWTH STRATEGIES

its position as a leader in the Orlando vacation ownership resort market by
developing and selling an additional 451 units at Vistana Resort, representing
an additional 23,001 Vacation Ownership Interests. In addition, the Company
plans to continue sales at Oak Plantation Villas by Vistana, a 242-unit former
apartment complex located in the Orlando market, which the Company is
converting in phases into a vacation ownership resort and which is owned by a
Related Partnership in which the Company holds an approximately 67%
controlling interest. As of December 31, 1996, Oak Plantation Villas by
Vistana had an unsold inventory of approximately 12,222 Vacation Ownership
Interests.

The Company believes that the Orlando market continues to offer significant
growth opportunities in terms of the development of vacation ownership resorts
and sales of Vacation Ownership Interests. Although the Orlando market is
highly competitive, the Company believes that the combination of its 16 years
of experience in the market and industry, its reputation and its established
marketing arrangements with hotels and other tourist venues provide the
Company with a competitive advantage in the Orlando market.

Promus. The Company and Promus have entered into the Promus Agreement, an
exclusive five-year agreement to jointly acquire, develop, market and
operate vacation ownership resorts in North America under Promus' Embassy
Vacation Resort, Hampton Vacation Resort and Homewood Vacation Resort
brands. Promus is a wholly-owned operating subsidiary of Promus Hotel
Corporation, a New York Stock Exchange company, which is one of the largest
companies in the hotel industry. As of December 31, 1995, Promus Hotel
Corporation had over 9,000 employees system-wide and owned, managed and/or
franchised more than 680 hotels, containing over 90,000 rooms and suites.

Under the Promus Agreement, the Company will be Promus' exclusive joint
venture partner for the development and operation of vacation ownership
resorts in North America and will also have the option of operating
vacation ownership resorts on a franchise basis. Promus has agreed that the
Company will be the sole franchisee in North America of the Hampton
Vacation Resort and Homewood Vacation Resort brands, and one of only two
franchisees in North America of the Embassy Vacation Resort brand. The
Promus Agreement precludes the Company from acquiring or developing
vacation ownership resorts with any other multi-hotel brand, but preserves
its ability to develop vacation ownership resorts in combination with non-
hotel brands (such as PGA of America), to acquire or develop vacation
ownership resorts under the Vistana name (other than in certain selected
markets agreed to by the parties), and to develop vacation ownership
resorts with unique, non-multi-hotel brand hotel properties. Although the
Company and Promus are evaluating new resort development opportunities for
the joint venture, no commitments have been made for a specific development
at this time. However, the parties have agreed to franchise two of the
Company's properties subject to execution of definitive franchise
agreements: (i) Oak Plantation Villas by Vistana, which is intended to
become the first vacation ownership resort to operate under the Hampton
Vacation Resort brand; and (ii) the Myrtle Beach Resort, which the Company
intends to operate under the Embassy Vacation Resort brand.

The Company believes that its strategic relationship with Promus will
offer growth opportunities with respect to the development and operation of
vacation ownership resorts by enhancing its sales and marketing of Vacation
Ownership Interests and providing further management expertise. The Company
anticipates that such growth opportunities will occur as a result of
Promus' strong brand recognition, large customer base and extensive product
development, marketing, management and information technology capabilities.
Moreover, the Company believes that its strategic relationship with Promus
will offer the Company access to a target market of prospective customers
who, because of their favorable demographics and, in the case of Promus'
Embassy Suites and Homewood Suites hotel brands, preference for suite
accommodations, will respond favorably to the Company's resorts. The
Company believes that the Embassy Vacation Resort, the Hampton Vacation
Resort and the Homewood Vacation Resort brands will generally (i) conform
to the relative price points, (ii) target similar customers, and (iii)
effect similar brand segmentation, as applicable

to Promus' Embassy Suites, Hampton Inn and Homewood Suites hotel brands,
respectively. See "Business--Affiliation with Promus."

World Golf Village. In the fall of 1996, the Company commenced
construction of the first phase of a 408-unit vacation ownership resort at
World Golf Village. Constituting the centerpiece of a planned community
under development near St. Augustine, Florida, World Golf Village is a
destination resort which will contain the World Golf Hall of Fame, a
championship golf course, a golf academy, a hotel and convention center,
restaurants, retail facilities and other amenities. The Company holds a
37.5% controlling ownership interest in a limited partnership, which has
the exclusive rights to develop and market Vacation Ownership Interests at
World Golf Village, and has exclusive multi-year marketing agreements for
solicitation at key locations throughout World Golf Village, including the
hotel/conference center, golf course, Walk of Champions and retail
facilities. The Company also has entered into an agreement with PGA Tour
Golf Course Properties, Inc. that allows the Company access to PGA Tour
databases for marketing purposes. See "--Description of the Company's
Resorts."

The Company believes that World Golf Village and the golf industry in
general represent attractive opportunities for expansion and the
development of future vacation ownership resorts by the Company. The
Company views the World Golf Village project as a unique, high-profile
opportunity to expand its vacation ownership resort business through the
golf market in a manner that will facilitate access to qualified customers
and maintain and enhance the Company's reputation. In addition, by
developing a vacation ownership resort at World Golf Village under the
Vistana name and through a Related Partnership in which the Company has a
minority, but controlling, interest, the Company believes it has adopted a
strategy which allows for risk diversification without sacrificing
operational control or the opportunity to build its brand awareness.

PGA of America. Under a letter of intent with PGA of America, which
contemplates a long-term affiliation for the development of future vacation
ownership resorts, the Company intends to acquire 25 acres of land adjacent
to an existing 36-hole championship golf facility owned by a subsidiary of
PGA of America in Port St. Lucie, Florida, for the development of the first
PGA Vacation Resort by Vistana. The property, located approximately 40
miles north of Palm Beach Gardens, Florida, is planned to contain
approximately 250 units, representing a total of 12,750 Vacation Ownership
Interests. The Company believes that PGA of America, through its
approximately 20,000 golf professionals, will provide strategic marketing
opportunities for this resort and any future PGA Vacation Resorts developed
by the Company. With members at approximately 9,000 of the nation's leading
golf facilities, PGA of America, which recently celebrated its 80th
anniversary, administers several professional golf tournaments, including
the PGA Championship, the Ryder Cup matches, the PGA Seniors' Championship,
the MasterCard PGA Grand Slam and the PGA Club Professional Championship.
Together with Vistana Resort at World Golf Village, the Company's
affiliation with PGA of America provides it with high-profile relationships
in the golf industry. See "--Description of the Company's Resorts."

Vistana Branded Resorts and Acquisition Opportunities. To capitalize on
the Vistana brand and reputation, the Company intends to seek other
vacation ownership resort development opportunities in selected vacation
markets where, among other things, it believes it can obtain effective
marketing access to potential customers. In addition, the Company from time
to time evaluates opportunities to acquire vacation ownership assets and
operating companies that may be integrated into the Company's existing
operations. However, the Company currently has no contracts or capital
commitments relating to any such acquisitions.

Each of the foregoing projects and agreements require the Company to make
substantial capital commitments and are subject to various risks, including
risks related to availability of financing, construction and development
activities and the Company's ability to execute its sales and marketing
strategies at new locations. See "Risk Factors--Risks of Rapid Growth." Over
the next 12 months, the Company anticipates spending approximately $51 million
for acquisition, expansion, conversion and construction activities with
respect to the identified projects. The Company anticipates funding these
expenditures with a portion of the net proceeds of the Offering, cash flow
from operations and through borrowings under its credit facilities.

Improving Operating Margins. The Company intends to improve operating
margins by reducing (i) its financing costs by entering into more favorable
borrowing agreements and (ii) its general and administrative costs as a
percentage of revenues. The Company anticipates that as a public company with
a strengthened balance sheet and increased access to the capital markets, it
will be able to lower its borrowing costs. Although the Company has not had
any discussions with prospective lenders, the Company believes that, as a
public company, which will be subject to various reporting requirements and
other financial disclosures, it will be able to better negotiate with
prospective lenders and further strengthen its existing borrowing
relationships. In addition, the Company has developed a comprehensive
administrative, operations and loan servicing infrastructure. The Company
believes it can further improve operating margins by spreading the cost of
these resources over an increasing revenue base.

DESCRIPTION OF THE COMPANY'S RESORTS

The following table sets forth certain information as of December 31, 1996
regarding each of the Company's existing and planned resorts, including
location, the date sales of Vacation Ownership Interests commenced (or are
expected to commence), the number of existing and total planned units, the
number of Vacation Ownership Interests sold at each existing resort since its
development by the Company and the number of Vacation Ownership Interests sold
in 1996, the average sales price of Vacation Ownership Interests sold in 1996
and the number of Vacation Ownership Interests available for sale currently
and after giving effect to planned expansion. The exact number of units
ultimately constructed and Vacation Ownership Interests available for sale at
each resort may differ from the following planned estimates based on future
land use, project development, site layout considerations and customer demand.
In addition, the Company's construction and development of new resorts or
additional units at its existing resorts (and sales of the related Vacation
Ownership Interests) is dependent upon general economic conditions and other
factors and may also be subject to delay as a result of certain circumstances,
some of which are not within the Company's control. See "Risk Factors."

Vacation Unsold
Ownership Vacation Ownership
Interests Average Interests at
Date Sales Units at Resort Sold(a) Sales Resorts(a)
Commenced/ --------------- ------------ Price -------------------
Expected to Total in Current Planned
Resort Location Commence(b) Current Planned Total 1996 1996(a) Inventory Expansion
- ---------------------- ------------------ ----------- ------- ------- ------ ----- ------- --------- ---------

Vistana Resort(c) Orlando, Florida 1980 1,088 1,539 54,924 5,294(d) $10,576(d) 2,525 23,001
Vistana's Beach Hutchinson Island,
Club(e) Florida 1989 76 76 3,849 367 $ 8,422 27 0
Oak Plantation Kissimmee, Florida
Villas by Vistana(f) 1996 242 242 133 133 $ 7,380 12,222 0
Vistana Resort at St. Augustine,
World Golf Village(g) Florida 1998 -- 408 -- -- -- -- 20,808
PGA Vacation Port St. Lucie,
Resort by Vistana(h) Florida 1998 -- 250 -- -- -- -- 12,750
Myrtle Beach Resort(i) Myrtle Beach,
South Carolina 1998 -- 550 -- -- -- -- 28,050
----- ----- ------ ----- ------ ------
TOTAL 1,406 3,065 58,906 5,794 14,774 84,609
===== ===== ====== ===== ====== ======

- --------

(a) The Company sells both annual Vacation Ownership Interests (entitling the
owner to the use of a unit for a one-week period on an annual basis) and
alternate-year Vacation Ownership Interests (entitling the owner to the
use of a unit for a one-week period on an alternate-year basis) with
respect to 51 weeks per year for each of its units, with one week
reserved for maintenance of the unit. Accordingly, the Company is able to
sell 51 annual Vacation Ownership Interests or 102 alternate-year
Vacation Ownership Interests per unit. For purposes of calculating
Vacation Ownership Interests Sold and Average Sales Price in 1996, data
with respect to Vacation Ownership Interests reflects Vacation Ownership
Interests sold regardless of classification as an annual or alternate-
year Vacation Ownership Interest. For purposes of calculating Unsold
Vacation Ownership Interests at Resorts, both the Current Inventory and
Planned Expansion amounts are based on sales of Vacation Ownership
Interests on an annual basis only. To the extent that alternate-year
Vacation Ownership Interests are sold, the actual number of Vacation
Ownership Interests at Resorts would be increased.

(b) Dates listed represent the dates the Company began recording (or expects
to begin recording) sales of Vacation Ownership Interests for financial
reporting purposes.

(c) Vistana Resort consists of seven development phases, six of which have
been completed and one of which is currently under construction. The
number of Units at Resort includes (i) 1,088 current existing units; and
(ii) 451 additional planned units (representing an additional 23,001
unsold annual Vacation Ownership Interests). As of December 31, 1996,
construction of 68 additional units was scheduled for completion by the
third quarter of 1997. The Company constructs additional units at various
times depending upon general market conditions and other factors.
Accordingly, construction of the remaining 383 additional units is
intended to be commenced from time to time as conditions merit. Figures
with respect to this property assume that all units to be constructed
will consist of one- and two-bedroom units; however, the actual number of
additional Vacation Ownership Interests resulting from planned
construction could vary depending upon the configuration of these units.

(d) Includes 1,810 alternate-year Vacation Ownership Interests with an average
sales price of $7,423 and 3,484 annual Vacation Ownership Interests with
an average sales price of $12,214.

(e) Vistana's Beach Club consists of two buildings containing a total of 76
current existing units, which represent 3,876 Vacation Ownership
Interests. The Company's Current Inventory of 27 annual Vacation
Ownership Interests at this resort consists primarily of previously-sold
Vacation Ownership Interests that the Company has since reacquired in
connection with defaults under customer mortgages. The Company has no
plans to build any additional units at this resort.

(f) Oak Plantation Villas by Vistana consists of 242 current existing units,
representing 12,342 annual Vacation Ownership Interests. Prior to its
acquisition by the Company in June 1996, this property was operated by a
third party as a rental apartment complex. The Company commenced
conversion of the property into a vacation ownership resort in July 1996.
As of December 31, 1996, the conversion of 61 units (representing 3,111
annual Vacation Ownership Interests) had been completed. The Company
intends to convert the remaining 181 units at various times depending
upon general market conditions and other factors. The Company currently
has no plans to build any additional units at this resort. Oak Plantation
Villas by Vistana will be operated on a franchise basis as the first
Hampton Vacation Resort pursuant to the Promus Agreement.

(h) PGA Vacation Resort by Vistana will consist of an estimated 250 units,
representing an estimated 12,750 annual Vacation Ownership Interests, and
will be constructed by the Company on 25 acres of land which it intends
to acquire in approximately three stages. In October 1996, the Company
entered into a letter of intent with PGA of America pursuant to which it
has agreed (subject to execution of definitive documentation and
customary due diligence) to purchase a minimum of 10 acres prior to March
21, 1997 and a total of 25 acres prior to December 31, 2000. The Company
anticipates that it will commence construction of the first 40-unit phase
of this resort (representing 2,040 annual Vacation Ownership Interests)
during the third quarter of 1997. Because the Company constructs
additional units at its resorts based on general market conditions and
other factors, construction of the remaining 210 units at this resort
will be commenced from time to time as conditions merit.

(i) In December 1996, the Company acquired the initial 14 acres of unimproved
land in Myrtle Beach, South Carolina for the development of the Myrtle
Beach Resort. The Company also has an option until December 31, 2003 to
acquire up to 26 additional acres of contiguous property for phased
expansion of the resort. The Company anticipates that it will commence
construction of the first 48-unit phase of this resort (representing
2,448 annual Vacation Ownership Interests) during the third quarter of
1997. Because the Company constructs additional units at its resorts
based on general market conditions and other factors, construction of the
remaining 502 units at this resort (assuming acquisition of the remaining
26 acres) will be commenced from time to time as conditions merit. The
Myrtle Beach Resort will be operated as an Embassy Vacation Resort
franchise pursuant to the terms of the Promus Agreement.

Pricing of Vacation Ownership Interests. The following table sets forth the
current range of selling prices of annual and alternate-year Vacation
Ownership Interests at each of the Company's resorts:

SELLING PRICES(A)
-------------------------------------------
ANNUAL VACATION ALTERNATE-YEAR VACATION
RESORT OWNERSHIP INTERESTS OWNERSHIP INTERESTS
- ------ ------------------- -----------------------

Vistana Resort(b)................. $7,250 -$16,000 $6,200-$8,250
Vistana's Beach Club(c)........... $8,995 -$ 9,950 N/A
Oak Plantation Villas by
Vistana(d)....................... $6,050 -$ 8,750 $3,700-$5,300
Vistana Resort at World Golf
Village(e)....................... $7,500 -$16,000 (f)
PGA Vacation Resort by
Vistana(e)....................... $6,000 -$12,000 (f)
Myrtle Beach Resort(e)............ $7,500 -$12,000 (f)

- --------

(a) Selling prices vary depending upon the specific calendar week to which a
Vacation Ownership Interest relates and unit-specific factors.

(b) Includes one-, two- and three-bedroom unit Vacation Ownership Interests.

(d) Includes one- and two-bedroom unit Vacation Ownership Interests.

(e) Resort not yet in operation. Selling prices listed reflect anticipated
ranges of selling prices of Vacation Ownership Interests at each resort.
Includes one- and two-bedroom unit Vacation Ownership Interests.

(f) The decision to offer alternate-year Vacation Ownership Interests is made
on a site-by-site basis. As the Company has not yet commenced sales at
these properties, there has been no final decision with regard to offering
alternate-year Vacation Ownership Interests or their related pricing.

Vistana Resort (Orlando, Florida). Vistana Resort, the Company's flagship
property, is an award-winning vacation ownership destination property located
less than one mile from the Walt Disney World(R) Resort Complex. Vistana
Resort was the first vacation ownership resort in Orlando and is the only
vacation ownership resort to have been named in Conde Nast Traveler magazine's
Gold List of the "top 500 best places to stay in the whole world" for 1995 and
1996. The resort was ranked as one of the top resorts (second in unit quality)
in the Orlando area by the most recent Zagat Survey of U.S. Hotels, Resorts &
Spas, which commented that it contains "the most luxurious villas in Orlando."
In addition, Vistana Resort has received the RCI Gold Crown designation since
the inception of the designation by RCI.

Vistana Resort opened as a vacation ownership resort in July 1980 with an
initial phase, known as the Courts Villas, containing 98 units on a 25-acre
parcel. In November 1980, the Company purchased an additional 100 acres of
surrounding unimproved land, in 1987 the Company purchased 15 acres of
contiguous land and, in January 1993, it acquired the last available
contiguous parcel to Vistana Resort, consisting of 10 acres. Since 1980, the
Company has constructed six additional phases at Vistana Resort: (i) the Falls
Villas (1982), consisting of 112 units; (ii) the Spas Villas (1984),
consisting of 104 units; (iii) the Palms Villas (1987), consisting of 144
units; (iv) the Springs Villas (1988), consisting of 102 units; (v) the
Fountains Villas (1990), consisting of 372 units; and (vi) the Lakes Villas
(1995), consisting of 156 units. In addition, 68 units are currently under
construction and the Company plans to build an additional 383 units.

Vistana Resort is one of the foremost Orlando resorts in terms of
facilities, amenities and guest services. The gated-access resort consists of
a 135-acre complex that features tropical landscaping, lakes, waterfalls,
fountains, walking paths, scenic bridges and gazebos. The resort's athletic
facilities include six recreation centers, 13 championship lighted tennis
courts, a full-service tennis pro shop, six outdoor temperature-controlled
swimming pools, seven outdoor whirlpools, five children's pools, an 18-hole
miniature golf course, lighted basketball courts, sand volleyball pits,
shuffleboard courts and other recreational amenities. Other guest-oriented
amenities at Vistana Resort include two restaurants and a general store
containing a Pizza Hut facility. As of December 31, 1996, accommodations at
Vistana Resort consisted of 1,080 two-bedroom units and eight one-bedroom
units, divided into seven villages--Courts, Falls, Spas, Palms, Springs,
Fountains and Lakes. The units at Vistana Resort sleep from four to eight
people (depending upon floorplan) and include amenities such as a fully-
equipped kitchen, washer/dryer, three color televisions with cable service, a
videocassette player, and an outdoor terrace or balcony. Most units have
master bathrooms that include a whirlpool tub or feature screened

terraces or balconies with water views. In addition, the Company recently
introduced units with an optional two-bedroom lockoff floor plan, a special
feature that allows the lockoff unit to be divided into two separate one-
bedroom units or a studio and a one-bedroom unit, depending upon floor plan.
Owners of the lockoff units have increased flexibility regarding the use of
their Vacation Ownership Interest, including splitting the unit and using each
portion for separate one-week vacations.

Vistana's Beach Club (Hutchinson Island, Florida). Vistana's Beach Club on
Hutchinson Island is located on Florida's Treasure Coast, approximately 40
miles north of West Palm Beach and approximately a two hour drive from
Orlando. Vistana's Beach Club is located on 3.5-acre parcel and was purchased
by the Company in January 1989. The resort consists of one nine-story building
containing 48 units and one eight-story building containing 28 units. The
resort contains numerous recreational amenities, including a freshwater
swimming pool, outdoor whirlpool, children's pool, elevated sun deck and two
tennis courts. Vistana's Beach Club contains 76 fully-equipped two-bedroom,
two-bathroom oceanfront units, each of which includes a terrace with a view of
the Atlantic Ocean. The units at Vistana's Beach Club sleep up to six people
(depending upon floorplan) and include amenities such as a fully-equipped
kitchen, washer/dryer, color televisions with cable service and a
videocassette player. The Company continues to manage and operate the
property, which is no longer in active sales. RCI has awarded the resort its
Gold Crown designation.

Oak Plantation Villas by Vistana (Kissimmee, Florida). In June 1996, the
Company acquired, through a Related Partnership, a 242-unit multifamily rental
apartment complex located in Kissimmee, Florida, approximately ten miles from
Walt Disney World(R) Resort, which it is converting in phases into a vacation
ownership resort. Sales of the first phase containing 32 units commenced in
October 1996. The gated-access 16-acre resort contains one- and two-bedroom
units, each of which offers a fully-equipped kitchen. The resort is fully
landscaped and includes a scenic lake with a lighted fountain, swimming pools
and other recreational amenities. Oak Plantation Villas by Vistana has
received the Gold Crown designation from RCI. Pursuant to the Promus
Agreement, the Company intends to operate the resort on a franchise basis as
the first Hampton Vacation Resort.

Vistana Resort at World Golf Village (St. Augustine, Florida). In September
1996, through a Related Partnership, the Company commenced construction of the
first 102-unit phase of a 408-unit vacation ownership resort at World Golf
Village. Constituting the centerpiece of an approximately 6,000-acre planned
community under development near St. Augustine, Florida, World Golf Village is
a destination resort which will contain the World Golf Hall of Fame,
championship golf courses and other amenities. The units at Vistana Resort at
World Golf Village, which will consist of one- and two-bedroom units, will
sleep from four to eight people (depending upon floorplan) and include
features such as a fully-equipped kitchen, washer/dryer, color televisions
with cable service, a videocassette player and an outdoor terrace or balcony.
The Company's resort is scheduled to open in the spring of 1998. The resort
will be located adjacent to the 17th and 18th fairways of the first golf
course at World Golf Village. Resort guests and owners will have preferred
access to up to 40% of the daily tee times on the course.

World Golf Village is being developed in conjunction with World Golf
Village, Inc., a collaboration of the world's leading golf organizations
formed to build and operate the World Golf Hall of Fame. The member
organizations of World Golf Village, Inc. include the PGA Tour, PGA of
America, Ladies Professional Golf Association, Augusta National Golf Club,
Royal Canadian Golf Association, Royal & Ancient Golf Club of St. Andrews, PGA
European Tour, PGA Tour of Japan and FNB Tour of Southern Africa. The 75,000-
square foot World Golf Hall of Fame and Museum has been designed by the
prominent museum architect E. Verner Johnson & Associates of Boston and will
feature interactive displays and exhibits developed in conjunction with Ralph
Appelbaum Associates of New York, a leading exhibit designer whose credits
include the National Holocaust Museum in Washington, D.C. World Golf Village,
Inc. estimates first year attendance at approximately 500,000 visitors.

In addition to the World Golf Hall of Fame and the Company's vacation
ownership resort, the World Golf Village resort complex will also include a
championship golf course named in honor of Sam Snead and Gene Sarazen, a PGA
Tour licensed golf academy, the International Golf Library and Resource
Center, the 300-room

World Golf Village Resort Hotel and 80,000-square foot St. Johns County
Conference Center (which, upon completion, will be the largest conference
center between Atlanta and Orlando), 80,000-square feet of themed retail
space, the headquarters and television production studios for PGA Tour
Productions and a large format, high definition theater. The component
facilities within World Golf Village will be linked by the Walk of Champions
honoring each member of the World Golf Hall of Fame.

PGA Vacation Resort by Vistana (Port St. Lucie, Florida). In October 1996,
the Company entered into a letter of intent with the PGA of America to
develop, market and operate a vacation ownership resort at The Reserve
community in Port St. Lucie, Florida. Subject to the execution of definitive
agreements, it is expected that the resort will be developed as a PGA Vacation
Resort by Vistana and will be located on a 25-acre parcel which the Company
will purchase from PGA of America in multiple phases. The resort will be
contiguous to the South Course of the PGA Golf Club at The Reserve, a
nationally-acclaimed $15 million golf course complex that opened in early
1996. The South Course, designed by Tom Fazio, was named the best new course
in its price category by Golf Digest magazine in December 1996. PGA of America
has announced its intention to open a golf learning center and build a third
golf course at the facility. In addition to resort amenities and services
comparable to the Company's other resorts, the PGA Vacation Resort by Vistana
will also offer its owners and renters preferential access to the PGA Golf
Club and other PGA golf courses in St. Lucie County. Owners and renters at the
resort will be able to book tee times through a centralized reservation system
that is anticipated to be developed jointly by the Company and PGA of America.
The Company currently expects that the resort will contain approximately 250
units constructed in phases. The Company anticipates commencing sales in 1998.

Myrtle Beach Resort (Myrtle Beach, South Carolina). In December 1996, the
Company acquired an initial 14-acre parcel of unimproved land on a 40-acre
site in Myrtle Beach, South Carolina, on which the Company intends to
construct a 550-unit vacation ownership resort. The Company has options to
acquire the remaining 26 acres of land in multiple phases through December 31,
2003. Pursuant to the Promus Agreement, the Company expects to operate the
resort on a franchise basis as an Embassy Vacation Resort. To date, the
Company's primary efforts have focused on acquiring the unimproved land and
securing marketing opportunities with tourist venues in the Myrtle Beach area.
The Company expects to commence construction of the first phase of the resort
in the third quarter of 1997, with completion estimated in February 1998.

The Company believes Myrtle Beach represents an attractive, growing market
for the expansion of its portfolio of vacation resorts. Similar to Orlando,
Myrtle Beach has a large number of visitors annually (estimated at 12 million
in 1994) whose length of stay averages approximately five days. Following its
key operating strategies, the Company has procured substantial marketing
affiliations with significant tourist venues in the Myrtle Beach area.
Moreover, the Myrtle Beach Resort will be centrally located in Myrtle Beach,
adjacent to Broadway at the Beach, a large entertainment and specialty retail
complex, which includes a Hard Rock Cafe and a Planet Hollywood restaurant.

AFFILIATION WITH PROMUS

The Company and Promus have entered into the Promus Agreement, an exclusive
five-year agreement to jointly acquire, develop, market and operate vacation
ownership resorts in North America under Promus' Embassy Vacation Resort,
Hampton Vacation Resort and Homewood Vacation Resort brands. Promus is a
wholly-owned operating subsidiary of Promus Hotel Corporation, a New York
Stock Exchange company, which is one of the largest companies in the hotel
industry. As of December 31, 1995, Promus Hotel Corporation had over 9,000
employees system-wide and owned, managed and/or franchised more than 680
hotels, containing over 90,000 rooms and suites. Under the Promus Agreement,
the Company will be Promus' exclusive joint venture partner for the
development and operation of vacation ownership resorts in North America and
will also have the option of operating vacation ownership resorts on a
franchise basis. Promus has agreed that the Company will be the sole
franchisee in North America of the Hampton Vacation Resort and Homewood
Vacation Resort brands, and one of only two franchisees in North America of
the Embassy Vacation Resort brand. The Promus Agreement precludes the Company
from acquiring or developing vacation ownership resorts with any other multi-
hotel brand, but preserves its ability to develop vacation ownership

resorts in combination with non-hotel brands (such as PGA of America), to
acquire or develop vacation ownership resorts under the Vistana name (other
than in certain selected markets agreed to by the parties), and to develop
vacation ownership resorts with unique, non-multi-hotel brand hotel
properties.

Each vacation ownership resort jointly developed under the Promus Agreement
will be acquired, developed and operated by a newly-formed entity that will be
owned equally by Promus and the Company and will be managed by the Company.
The parties have agreed that each of these entities will enter in a Sales and
Marketing Agreement with the Company, pursuant to which the Company will be
responsible for marketing and sales of Vacation Ownership Interests at the
resort, and a Franchise Agreement and Management Agreement with Promus,
pursuant to which Promus will license the applicable brand name and provide
other hospitality-related services at the resort. The Promus Agreement
provides that both partners must first offer vacation ownership resort
development opportunities in the selected markets to the joint venture (with
certain exceptions for development of the Company's non-multi-hotel branded
resorts). In the event that one party elects not to pursue the opportunity,
the other party has certain rights to develop the resort independently or, in
the case of Promus, franchise an Embassy Vacation Resort to its existing
franchisee. Moreover, if Promus elects not to pursue an opportunity through
the joint venture, the Company may elect to develop the resort as a Promus
franchisee, subject to Promus' standard franchise approval, on pre-agreed
terms, conditions and fees. In order to maintain its franchise relationship
with Promus, the Company may be required to incur expenditures and meet other
obligations at the franchised resorts required by the applicable franchise
agreements, which may (i) increase its operating costs, and (ii) limit the
Company's flexibility with respect to the operation of the applicable resort
in order to comply with the applicable franchise agreements. The Promus
Agreement may be terminated by either party in the event that the parties have
not jointly developed a resort during the first three years of the Promus
Agreement.

Although the Company and Promus are currently evaluating new resort
development opportunities for the joint venture, no commitments have been made
for a specific development at this time. However, the Promus Agreement
contemplates that Oak Plantation Villas by Vistana will operate as the first
Hampton Vacation Resort and the Myrtle Beach Resort will operate as an Embassy
Vacation Resort, in each case on a franchise basis. See "Risk Factors--Risks
of Rapid Growth" and "--Description of the Company's Resorts."

SALES AND MARKETING

General. During its 16-year history as a leading innovator, developer and
operator of vacation ownership resorts, the Company has developed skills and
expertise necessary for the cost-effective marketing and selling of Vacation
Ownership Interests at its resorts. In addition to building regional expertise
in the competitive Orlando market, the Company believes that it is positioned
to enter other regional destination resort markets and to develop marketing
and sales programs specifically targeted towards popular markets segments such
as golf. In the Company's view, its unique marketing strategies and integrated
sales programs have allowed it to succeed in the highly-specialized field of
Vacation Ownership Interest sales and have proven to be critical components of
the Company's continued competitiveness and profitability.

Marketing Programs. The Company's current marketing efforts center on three
principal programs--the Vistana Preview Coordinator program (the "VPC
Program"), the VIP/In-House Program and international brokerage operations. In
addition to these programs, the Company also utilizes a variety of other
marketing approaches, including vacation sampler programs (designed to allow a
prospective purchaser to be a guest at the resort and to experience vacation
ownership prior to making a decision to buy), direct mail and telemarketing
campaigns, and, more recently, strategic alliances with travel, lodging and
recreational partners, such as Promus and PGA of America. Each of the
Company's marketing programs seeks to provide consistent access to qualified
prospective buyers and involves specific target marketing to leisure industry
customers. In the Company's view, these strategies, which often include one-
to-one contact, have proven to be more effective and cost-efficient than
conventional broad-based advertising.

The VPC Program consists of public contact marketing by an employee of the
Company who provides concierge-type services in the lobby of a hotel or
condominium vacation property, or at other attractions near one of the
Company's resorts. The goal of the VPC Program is to generate a regular flow
of qualified potential

Vacation Ownership Interest purchasers to visit the on-site sales centers at
the Company's resorts. To encourage interest in the Company's resorts, the VPC
Program representative offers interested potential buyers visitor information
and assistance with their vacation plans and invites them to tour one of the
Company's resorts, often providing additional incentives such as tickets to
local attractions. The majority of the Company's VPC Program representatives
are located at facilities and properties with which the Company has an
exclusive solicitation arrangement. The Company seeks to ensure that its VPC
Program representatives are placed only at facilities frequented by potential
customers and that each representative is thoroughly trained and courteous.
Since 1980, the VPC Program has attracted approximately 400,000 families to
tour the Company's properties.

The Company's VIP/In-House Program focuses on guests staying at the
Company's vacation ownership resorts, whether they are owners, renters or
exchangers. Through a combination of guest services and telephone contact,
these guests are invited to a VIP tour of the vacation ownership resort. The
Company is continually identifying cross-marketing opportunities within its
existing customer base and new vacation ownership products that will be
attractive to this segment of the market. The Company's marketing approach
towards these individuals is specifically tailored to take into account the
fact that they are already familiar with the resort and the vacation ownership
concept, and are experiencing the amenities and guest services first-hand. The
Company believes that its marketing efforts in this area are greatly enhanced
by the perceived quality and value of its resorts, amenities and guest
services, and its ability to consistently deliver an enjoyable vacation
experience. With more than 1,060 units operating at Vistana Resort at an
approximately 88% occupancy rate, the VIP/In-House program has been a key
component of the Company's growth and, in the Company's view, will continue to
play an important role in the Company's marketing efforts as its portfolio of
vacation ownership resorts continues to grow.

In addition to the Company's domestic operations, the Company manages and
coordinates a network of independent brokers to sell Vacation Ownership
Interests abroad. In light of the increasing popularity of central Florida
among overseas visitors and the overall rise in vacation ownership worldwide,
the Company believes that the international market presents significant growth
opportunities. However, international interest in the Company's future resorts
is expected to vary depending upon the location of the project. In 1995 and
1996, approximately 30% of the Company's sales have been to foreign purchasers
(with over one-half of such sales made through brokers in other countries and
all sales made in United States dollars), many of whom buy the Vacation
Ownership Interest "sight unseen" based on the Company's reputation for
delivering a high-quality experience. This segment of the Company's sales
increased by approximately 94% in 1996 as compared to 1995. The Company is
currently enhancing its existing international brokerage operations, with a
particular focus on the South and Central American markets of Argentina,
Guatemala and Chile, where the Company maintains its only direct foreign sales
office in Santiago. The Company anticipates that the international market may
offer opportunities to market multiple property sites as the Company continues
to expand.

Sales Focus. The Company's marketing efforts are supported by an experienced
and highly-trained resort-based sales operation, which, in the Company's view,
has been the foundation of the Company's successful performance during its 16-
year history. Prospective purchasers are given a personalized on-site tour of
the Company's resort and provided information about vacation ownership and
available financing options. Presentations to potential buyers, which
typically last between two and one-half and four hours, are individually
tailored to take into account the guest's particular needs and background,
such as vacationing habits and familiarity with the vacation ownership
concept. Prior to closing, each sale is verified by a settlement manager who
reviews all documents and pertinent facts of the sale with the purchaser and
is available to answer any questions that the new owner may have.

Because the most critical component of the Company's sales effort is its
sales personnel, the Company continually strives to attract, train and retain
a superior sales force. The Company's policy is for each of its sales
representatives to be a licensed real estate professional and undergo
intensive instruction and training. In addition, each sales representative is
an employee of the Company and receives full employment benefits. The Company
is continually reviewing and improving its selling, recruiting and training
processes to achieve high levels of customer and employee satisfaction. The
Company currently employs more than 160 sales

representatives at its two Orlando resorts presently selling Vacation
Ownership Interests. See "--Governmental Regulation."

CUSTOMER FINANCING

The Company extends financing to purchasers of its Vacation Ownership
Interests at its resorts. These purchasers generally make a down payment equal
to at least 10% of the sales price and borrow the remaining sales price from
the Company. These borrowings bear interest at fixed rates, are secured by
first mortgages on the underlying Vacation Ownership Interests and amortize
over periods ranging up to ten years. The Company funds its resort acquisition
and development and operations by borrowing up to 90% of the aggregate
principal amount of its customer mortgages receivable under its existing
credit facilities. As of December 31, 1996, the Company's existing credit
facilities provided for an aggregate of up to approximately $109.2 million of
available customer mortgages receivable financing to the Company bearing
interest at variable rates based on a specified prime rate. As of December 31,
1996, the Company had approximately $73.2 million of indebtedness outstanding
under its existing customer mortgages receivable credit facilities at a
weighted average interest rate of 10.4% per annum secured by the Company's
pledge of a portion of its customer mortgages receivable. As of December 31,
1996, the Company had a portfolio of approximately 20,400 loans to customers
totalling approximately $116.0 million, with an average contractual yield of
14.4% per annum. As of December 31, 1996 (i) approximately 3.1% of the
Company's customer mortgages receivable were 60 to 120 days past due; and
(ii) approximately 5.4% of the Company's customer mortgages receivable were
more than 120 days past due and the subject of legal proceedings. See "Risk
Factors--Risks Associated with Customer Mortgages Receivable."

The Company has historically derived net interest income from its financing
activities as a result of the positive difference between the interest rates
it charges its customers who finance their purchase of a Vacation Ownership
Interest and the interest rates it pays its lenders. Because the Company's
indebtedness bears interest at fixed and variable rates and the Company's
customer mortgages receivable bear interest at fixed rates, the Company bears
the risk of increases in interest rates with respect to its indebtedness. The
Company engages in interest rate hedging activities from time to time in order
to reduce the risk and impact of increases in interest rates with respect to
such indebtedness. See "Risk Factors--Risks Associated with Hedging
Activities."

The Company bears the risk of defaults under its customer mortgages on
Vacation Ownership Interests. If a purchaser of a Vacation Ownership Interest
defaults on the mortgage during the early part of the loan amortization
period, the Company will not have recovered its marketing, selling (other than
certain sales commissions), and general and administrative costs per Vacation
Ownership Interest, and such costs will again be incurred in connection with
the subsequent resale of the Vacation Ownership Interest. As is sometimes the
practice in the vacation ownership industry, the Company does not verify the
credit history of its customers. Based on the Company's historical customer
default rate, the fact that its customers are required to make a down payment
of at least 10% of the purchase price of a Vacation Ownership Interest (which
the Company views as indicative of a customer's financial wherewithal to meet
obligations under the mortgage related to the Vacation Ownership Interest) and
that the customer mortgage is secured by the underlying Vacation Ownership
Interest, the Company does not believe that credit history verification is
cost-effective or necessary. In addition, although in certain jurisdictions
(including Florida) the Company may seek recourse against a defaulting
customer for the sales price of the Vacation Ownership Interest, the Company
has not historically pursued such a remedy. See "Risk Factors--Risks
Associated with Customer Mortgages Receivable."

The Company had historically provided customer mortgages receivable
financing for up to seven years, as had been typical for the industry. Over
the past several years, industry trends have been to lengthen the term of such
financing to up to ten years. The Company has recently begun to offer ten-year
financing for certain of its customer mortgages receivable.

OTHER OPERATIONS

Room Rental Operations. In order to generate additional revenues at its
resorts that have an inventory of unused or unsold Vacation Ownership
Interests, the Company rents units with respect to such Vacation

Ownership Interests on a nightly or weekly basis. The Company offers these
unoccupied units through direct consumer sales, travel agents and package
vacation wholesalers. In addition to providing the Company with supplemental
revenues, the Company believes its room rental operations provide it with a
good source of lead generation for the sale of Vacation Ownership Interests.
As part of the management services provided by the Company, at the request of
a Vacation Ownership Interest owner, the Company, for a fee equal to 50% of a
unit's rental rate, net of commissions, will rent an owner's Vacation
Ownership Interest in the event the owner is unable to use or exchange the
Vacation Ownership Interest. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

Resort Management. The Company currently provides both hospitality and
homeowners' association management services at its existing vacation ownership
resorts, and intends to provide the same services at its future vacation
ownership resorts pursuant to management agreements with the homeowners'
associations present at such resorts (which are comprised of owners of
Vacation Ownership Interests at the resort or, in the case of Vistana Resort,
a particular phase of the resort). Pursuant to each such management agreement
the Company is paid by the applicable homeowners' association an annual
management fee ranging from $24.47 to $44.09 per Vacation Ownership Interest,
which fee is equal to approximately 10% of aggregate gross assessment fees
payable by the owners of the Vacation Ownership Interests. The Company is
solely responsible for, and has exclusive authority over, all activities
necessary for the day-to-day operation of the resorts, including
administrative services, procurement of inventories and supplies, and
promotion and publicity. Management agreements between the Company and the
homeowners' associations typically provide for an initial term of three years,
which automatically renews for additional three-year terms. The homeowners'
association may remove the Company as manager upon obtaining the requisite
owner vote. The Company also provides all managerial and other employees
necessary for the operation of its resorts, whose duties include, among other
things, review of the maintenance of the resorts, preparation of reports,
budgets and projections and employee training. See "Risk Factors--Risks
Associated with Resort Management."

Telecommunications Services. The Company's telecommunications business
generates revenues from the installation of telephone, data and cable
television equipment and infrastructure at its resorts, the rental of
telephone and related cable and equipment to the homeowners' associations, and
the provision of ongoing long-distance telephone and cable television service
at its resorts pursuant to contracts with the homeowners' associations. The
Company also derives revenues from providing telecommunications design and
installation services to third parties, including hotels, universities,
hospitals and airports as a contractor or subcontractor. See "Risk Factors--
Risks Associated with Telecommunications Operations."

PARTICIPATION IN VACATION OWNERSHIP INTEREST EXCHANGE NETWORKS

The Company believes that consumers are more likely to purchase its Vacation
Ownership Interests as a result of the Company's participation in the Vacation
Ownership Interest exchange network operated by RCI, a leading exchange
network operator which was recently acquired by HFS Incorporated. In a 1995
study sponsored by the Alliance for Timeshare Excellence and ARDA, exchange
opportunity was cited by purchasers of Vacation Ownership Interests as one of
the most significant factors in their decision to purchase a Vacation
Ownership Interest. Membership in RCI allows the Company's customers to
exchange in a particular year their occupancy right in the unit in which they
own a Vacation Ownership Interest for an occupancy right at the same time or a
different time in another participating resort, based upon availability and
the payment of a variable exchange fee. A member may exchange his or her
Vacation Ownership Interest for an occupancy right in another participating
resort by listing the Vacation Ownership Interest as available with the
exchange network operator and by requesting occupancy at another participating
resort, indicating the particular resort or geographic area to which the
member desires to travel, the size of the unit desired and the period during
which occupancy is desired. RCI assigns a rating to each listed Vacation
Ownership Interest, based upon a number of factors, including the location and
size of the unit, the quality of the resort and the period of the year during
which the Vacation Ownership Interest is available, and attempts to satisfy
the exchange request by providing an occupancy right in another Vacation
Ownership Interest with a similar rating. If RCI is unable to meet the
member's initial request, it suggests alternative resorts based on
availability.

Founded in 1974, RCI has grown to be the world's largest Vacation Ownership
Interest exchange network operator, with a total of more than 3,000
participating resort facilities and over two million members worldwide. During
1995 RCI processed over 1.5 million exchanges. The cost of the annual
membership fee in RCI, which is typically at the option and expense of the
owner of the Vacation Ownership Interest, is approximately $65 per year. RCI
has assigned high ratings to the Vacation Ownership Interests in each of the
Company's three operating resorts, and such Vacation Ownership Interests have
in the past been exchanged for Vacation Ownership Interests at other highly-
rated RCI-listed resorts. During 1995, approximately 97% of all exchange
requests were fulfilled by RCI, and approximately 58% of all exchange requests
are confirmed on the day of the request.

Each of the Company's operating resorts is currently qualified for
participation in the RCI exchange network. The Company's agreement with RCI
provides that, until May 2001, the RCI exchange program will be the only
exchange program permitted at resorts owned and controlled by the Company. In
addition, each of the Company and Messrs. Gellein and Adler have agreed that
until May 2001, each vacation ownership resort owned, developed or managed by
an entity in which Messrs. Gellein or Adler have a controlling interest will
execute an affiliation agreement with RCI having a six-year initial term. See
"Risk Factors--Risks Associated with Vacation Ownership Exchange Networks."

COMPETITION

The vacation ownership industry historically has been highly fragmented and
dominated by a very large number of local and regional resort developers and
operators, each with small resort portfolios generally of differing quality.
More recently, many of the world's most widely-recognized lodging, hospitality
and entertainment companies have begun to develop and sell Vacation Ownership
Interests under their brand names, including Marriott, Disney, Hilton, Hyatt,
Four Seasons, Inter-Continental, Westin and Promus. In addition, other
publicly-traded companies focussed on the vacation ownership industry, such as
Signature, Fairfield, and Vacation Break have, currently compete, or may in
the future compete, with the Company. Moreover, competition in the Orlando
market is particularly intense, and includes many nationally recognized
lodging, hospitality and entertainment companies, as well as active privately-
owned local operators of vacation ownership resorts such as CFI and Orange
Lake. Furthermore, significant competition exists in Myrtle Beach, South
Carolina, a destination in which the Company expects to commence sales of
Vacation Ownership Interests by 1998. Many of these entities possess
significantly greater financial, sales and marketing, personnel and other
resources than those of the Company and may be able to grow at a more rapid
rate or more profitably as a result. Management believes that industry
competition will be increased by recent and possibly future consolidation in
the vacation ownership industry.

Of the Company's major brand name lodging company competitors, the Company
believes that: (i) Marriott entered the vacation ownership market in 1985 and
currently sells Vacation Ownership Interests at nine resorts which it also
owns and operates and directly competes with the Company's Orlando area
resorts; (ii) Disney entered the market in 1991, currently sells Vacation
Ownership Interests at three locations which it also owns and operates and
directly competes with the Company's Orlando area resorts; (iii) Hilton
entered the market in 1993, currently sells Vacation Ownership Interests at
two resorts which it owns and operates and directly competes with the
Company's Orlando area resorts; (iv) Promus entered the market through a
franchise relationship in 1994 and directly competes with the Company's
Orlando area resorts; (v) Hyatt entered the market in 1995, owns and operates
one resort in Key West, Florida but does not directly compete in any of the
Company's existing markets (although Hyatt has announced an intention to
develop a vacation ownership resort in Orlando); (vi) Four Seasons is
developing its first vacation ownership resort in Carlsbad, California, but
does not currently directly compete in any of the Company's existing markets;
and (vii) Inter-Continental announced its entry into the market in 1996, but
has yet to announce any specific projects. See "Risk Factors--Competition."

GOVERNMENTAL REGULATION

General. The Company's marketing and sales of Vacation Ownership Interests
and other resort operations are subject to extensive regulation by the federal
government and the states in which the Company's resorts are located and in
which its Vacation Ownership Interests are marketed and sold. Federal
legislation to which the Company is or may be subject includes the Federal
Trade Commission Act, the Fair Housing Act, the Truth-in-Lending Act, the Real
Estate Settlement Procedures Act, the Equal Credit Opportunity Act, the
Interstate Land Sales Full Disclosure Act, the Telephone Consumer Protection
Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act and the
Civil Rights Acts of 1964 and 1968. The Florida Condominium Act and the
Florida Vacation Plan and Timesharing Act extensively regulate the creation
and management of timeshare condominiums, the marketing and sale of Vacation
Ownership Interests, the escrow of purchaser funds and other property prior to
completion of construction and closing, the content and use of advertising
materials and promotional offers, the creation and operation of exchange
programs and multi-site timeshare plan reservation systems, and the resale of
Vacation Ownership Interests. In addition, many states have adopted similar
legislation as well as specific laws and regulations regarding the sale of
Vacation Ownership Interests. The laws of most states, including Florida and
South Carolina, require a designated state authority to approve a detailed
offering statement describing the Company and all material aspects of the
resort and sale of Vacation Ownership Interests at such resort. In addition,
the laws of most states in which the Company sells Vacation Ownership
Interests grant the purchaser of a Vacation Ownership Interest the right to
rescind a contract of purchase at any time within a statutory rescission
period. Furthermore, most states have other laws which regulate the Company's
activities, such as real estate licensure laws, travel sales licensure laws,
anti-fraud laws, telemarketing laws, price, gift and sweepstakes laws, and
labor laws. The Company believes that it is in material compliance with all
applicable federal, state, local and foreign laws and regulations to which it
is currently subject. See "Risk Factors--Risks Associated with Governmental
Regulation."

Environmental Matters. Under various federal, state and local environmental
laws, ordinances and regulations, a current or previous owner or operator of
real estate may be required to investigate, remediate and remove hazardous or
toxic substances or petroleum product releases at such property, and may be
held liable to a governmental entity or to third parties for property damage
and for investigation remediation and removal costs incurred by such parties
in connection with the contamination. Such laws typically impose clean-up
responsibility and liability without regard to whether the owner or operator
knew of or caused the presence of the contaminants, and the liability under
such laws has been interpreted to be joint and several unless the harm is
divisible and there is a reasonable basis for allocation of responsibility.
The cost of investigation, remediation or removal of such substances may be
substantial, and the presence of such substances, or the failure to properly
remediate the contamination on such property, may adversely affect the owner's
or operator's ability to sell or rent such property or to borrow using such
property as collateral. Persons who arrange for the disposal or treatment of
hazardous or toxic substances at a disposal or treatment facility also may be
liable for the costs of removal or remediation of a release of hazardous or
toxic substances at such disposal or treatment facility, whether or not such
facility is owned or operated by such person. In addition, some environmental
laws create a lien on the contaminated site in favor of the government for
damages and costs it incurs in connection with the contamination. Finally, the
owner or operator of a site may be subject to common law claims by third
parties based on damages and costs resulting from environmental contamination
emanating from a site. In connection with its ownership and operation of its
properties, the Company may be potentially liable for such costs.

The Company has recently conducted Phase I environmental assessments at each
of its existing resorts and properties subject to acquisition in order to
identify potential environmental concerns. These Phase I assessments have been
carried out in accordance with accepted industry practices and consisted of
non-invasive investigations of environmental conditions at the properties
owned by the Company, including a preliminary investigation of the sites and
identification of publicly known conditions concerning properties in the
vicinity of the sites, physical site inspections, review of aerial photographs
and relevant governmental records where readily available, interviews with
knowledgeable parties, investigation for the presence of above-ground and
underground storage tanks presently or formerly at the sites, a visual
inspection of potential lead-based paint and suspect friable asbestos
containing materials where appropriate, a radon survey, and the preparation
and issuance of written reports. The Company's assessments of its properties
have not revealed any environmental liability

that the Company believes would have a material adverse effect on the
Company's business, assets, financial condition or results of operations, nor
is the Company aware of any such material environmental liability. See "Risk
Factors--Potential Environmental Liabilities."

The Company believes that its properties are in compliance in all material
respects with all federal, state and local laws, ordinances and regulations
regarding hazardous or toxic substances. The Company has not been notified by
any governmental authority or any third party, and is not otherwise aware, of
any material noncompliance, liability or claim relating to hazardous or toxic
substances or petroleum products in connection with any of its present
properties.

Other Regulations. Under various state and federal laws governing housing
and places of public accommodation, the Company is required to meet certain
requirements related to access and use by disabled persons. Many of these
requirements did not take effect until after January 1, 1991. Although
management believes that the Company's resorts are substantially in compliance
with present requirements of such laws, the Company may incur additional costs
of compliance in connection with the development of new resorts, or conversion
or renovation of existing resorts. Additional legislation may impose further
burdens or restriction on owners with respect to access by disabled persons.
The ultimate amount of the cost of compliance with such legislation is not
currently ascertainable, and, while such costs are not expected to have a
material effect on the Company, such costs could be substantial. Limitations
or restrictions on the completion of certain renovations may limit application
of the Company's growth strategy in certain instances or reduce profit margins
on the Company's operations.

OTHER PROPERTIES

The Company's other properties include an office plaza consisting of two
three-story buildings (totalling approximately 67,000-square feet), which
headquarters the Company's administrative operations, a 27,000-square foot
two-story reception center and resort operations complex, maintenance and
laundry facilities, a freestanding general store (including a Pizza Hut
facility) and a gift shop leased to an unaffiliated entity. All of these other
properties are owned by the Company, subject to mortgages pursuant to the
Company's existing credit facilities, and are located within or adjacent to
Vistana Resort in Orlando.

EMPLOYEES

As of December 31, 1996, the Company had approximately 1,287 full-time
employees. The Company believes that its employee relations are good. None of
the Company's employees are represented by a labor union.

INSURANCE

The Company carries comprehensive liability, fire, windstorm, tropical storm
and business interruption insurance with respect to its properties and
interests in its resorts (i.e., its inventory of unsold Vacation Ownership
Interests) with policy specifications, insured limits and deductibles
customarily carried for similar properties which the Company believes are
adequate. There are, however, certain types of losses (such as losses arising
from acts of war) that are not generally insured because they are either
uninsurable or not economically insurable. Should an uninsured loss or a loss
in excess of insured limits occur, the Company could lose its capital invested
in a resort, as well as the anticipated future revenues from such resort and
would continue to be obligated on any mortgage indebtedness or other
obligations related to the property. Any such loss could have a material
adverse effect on the Company. See "Risk Factors--Uninsured Loss; Natural
Disasters."

LEGAL PROCEEDINGS

The Company is currently subject to litigation and claims respecting
employment, tort, contract, construction and commission disputes, among
others. In the judgment of the Company, none of these lawsuits or claims
against the Company, if adversely decided, is expected to have a material
adverse effect on the Company, its business operations, results of operations
or financial condition.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning each person
who is a director or an executive officer of the Company or upon the
completion of the Offering will become a director of the Company. Positions
with the Company include positions with the Company's predecessors.

NAME AGE POSITION
- ---- --- --------

Raymond L. Gellein, 49 Chairman of the Board, Co-Chief Executive Officer
Jr..................... and Director
Jeffrey A. Adler........ 44 President, Co-Chief Executive Officer and Director
Matthew E. Avril........ 36 Executive Vice President and Chief Operating Officer
Susan Werth............. 48 Senior Vice President, General Counsel and Secretary
Carol Lytle............. 36 Vice President
John M. Sabin........... 42 Senior Vice President, Chief Financial Officer and
Treasurer
Laurence S. Geller...... 49 Proposed Director
Charles E. Harris....... 50 Proposed Director
Steven J. Heyer......... 44 Proposed Director

Raymond L. Gellein, Jr., has served as Chairman of the Board, Co-Chief
Executive Officer and a Director since December 1996. Mr. Gellein served as
Chairman of the Board and a Director since November 1991 and served as Chief
Executive Officer from 1981 to November 1991. Prior to joining the Company,
Mr. Gellein served as Vice President and Division Manager in Real Estate for
the Continental Illinois National Bank and Trust Company of Chicago. Mr.
Gellein has been the Chairman of the Florida Chapter of ARDA since such
chapter's inception, and is a member of ARDA's Legislative Committee. Mr.
Gellein is also a member of the Board of Overseers of the Roy E. Crummer
Graduate School of Business Education at Rollins College. Mr. Gellein received
an M.M. degree from Northwestern University's Kellogg School of Management and
a B.A. degree from Denison University.

Jeffrey A. Adler has served as President, Co-Chief Executive Officer and a
Director since December 1996. Mr. Adler served as President and a Director
since November 1991 and served as Executive Vice President from 1983 to
November 1991. Prior thereto, Mr. Adler served as Second Vice President and
Real Estate Lending Officer for the Continental Illinois National Bank and
Trust Company of Chicago. Mr. Adler is a member of the board of directors of
ARDA, a member of ARDA's Strategic Planning Committee and Alliance for
Timeshare Excellence. Mr. Adler received an M.M. degree from Northwestern
University's Kellogg School of Management and a B.A. degree from Ohio State
University.

Matthew E. Avril has served as Executive Vice President and Chief Operating
Officer since November 1996. From February 1994 until November 1996 and
February 1997, respectively, Mr. Avril served as Senior Vice President and
Chief Financial Officer, respectively, and from January 1992 until November
1994, Mr. Avril served as Senior Vice President and Treasurer. From March 1989
to December 1991, Mr. Avril served as Vice President and Controller. Mr. Avril
is a certified public accountant and a member of the Florida Institute of
Certified Public Accountants. Mr. Avril received a B.B.A. degree from the
University of Miami located in Florida.

Susan Werth has served as Senior Vice President, General Counsel and
Secretary since December 1996. Ms. Werth served as Senior Vice President--Law
from May 1996 to December 1996. Prior thereto Ms. Werth represented the
Company as outside counsel for approximately 10 years. From January 1990 until
May 1996, Ms. Werth was a partner of the law firm of Weil, Gotshal & Manges,
LLP, in Miami, Florida. Ms. Werth received an A.B. degree from Barnard College
and a J.D. degree from Columbia Law School, and is a member of the Florida
Bar.

Carol Lytle has served as Vice President and President of Vistana-Orlando,
in charge of overseeing the entire sales and marketing responsibility for the
Company's central Florida operations, since December 1996. Ms. Lytle joined
the Company in its marketing area in 1980, was promoted to a Manager of
Marketing in 1981, a Director of Marketing in 1983, a Vice President of
Marketing in 1984, and a Senior Vice President of Marketing in 1989.

John M. Sabin has served as Senior Vice President, Chief Financial Officer
and Treasurer of the Company since February 1997. From June 1996 to February
1997, Mr. Sabin served as Vice President--Finance of Choice Hotels
International, Inc. From June 1995 to February 1997, Mr. Sabin also served as
Vice President--Mergers and Acquisitions of Choice Hotels International, Inc.
and, from December 1993 to October 1996, he served as Vice President--Finance
and Assistant Treasurer of Manor Care, Inc., the former parent of Choice
Hotels International, Inc. From 1990 to December 1993, Mr. Sabin served as
Vice President--Corporate Mergers and Acquisitions of Marriott Corporation. In
addition, Mr. Sabin is a director of Competitive Technologies, Inc., a
publicly-traded technology licensing and transfer company. Mr. Sabin received
B.S., M.Acc. (Masters of Accountancy) and M.B.A. degrees from Brigham Young
University and a J.D. degree from the J. Reuben Clark Law School at Brigham
Young University.

Laurence S. Geller has consented to become a Director of the Company upon
completion of the Offering. Mr. Geller has served as the Chairman of Geller &
Co., a real estate, gaming and tourism, and lodging consulting company, since
December 1989. From 1984 through December 1989, Mr. Geller served as the
Executive Vice President and Chief Operating Officer of Hyatt Development
Corporation, a developer of domestic and international hotels and resorts.
From 1976 to 1981, Mr. Geller served as a Senior Vice President of Holiday
Inns, Inc. Mr. Geller is a director of Sunstone Hotel Investors, Inc., a
publicly traded lodging real estate investment trust, and Sky Games
International Limited, a publicly traded gaming technology company. Mr. Geller
is the Immediate Past Co-Chairman of the Industry Real Estate Financing
Advisory Council of the American Hotel and Motel Association, and Past Vice
Chairman and current member of the Commercial & Retail Council of Urban Land
Institute. Mr. Geller received a National Diploma from Ealing Technical
College (U.K.).

Charles E. Harris has consented to become a Director of the Company upon
completion of the Offering. Mr. Harris has served as President and Chief
Executive Officer of Synagen Capital Partners, Inc., a private merchant
banking firm ("Synagen"), since 1989, and as President and Chief Executive
Officer of Allen C. Ewing & Co. ("Ewing"), an investment banking firm, since
1995 and 1994, respectively. Mr. Harris was Vice President--Corporate Finance
of Ewing from 1992 to 1994. Mr. Harris also served as Chairman and Chief
Executive Officer of First Commerce Banks of Florida, Inc. from September 1995
to July 1996. From 1987 to 1993, Mr. Harris was Chairman (and from 1988 to
1993, Chief Executive Officer) of Mid-State Federal Savings Bank. Prior
thereto, Mr. Harris was engaged in the private practice of law and served as
an Assistant Professor of Law at the University of Florida and as Senior Vice
President and General Counsel of Sun Banks, Inc. Mr. Harris received a B.A.
degree from the University of Florida and a J.D. degree from Harvard Law
School. See "Underwriting."

Steven J. Heyer has consented to become a Director of the Company upon
completion of the Offering. Mr. Heyer has served as President, Worldwide
Sales, Marketing, Distribution and International Networks for Turner
Broadcasting System, Inc., a subsidiary of Time Warner, Inc., since September
1996. Mr. Heyer joined Turner Broadcasting System, Inc. in May 1994 as
President of Turner Broadcasting Sales, Inc. From September 1992 to May 1994,
Mr. Heyer was President of Young & Rubicam Advertising Worldwide and Executive
Vice President, a Director and a member of the Executive Committee of Young &
Rubicam, Inc., an international advertising agency. From October 1977 to
September 1992, Mr. Heyer was employed by Booz, Allen & Hamilton, Inc., a
management consulting firm, and served as Senior Vice President and Managing
Partner from 1987 to September 1992. Mr. Heyer is a member of the board of
directors of the Cable Advertising Bureau, the Ad Council and the Partnership
for a Drug Free America, and a member of the Board of Overseers of the Tuck
School at Dartmouth College. Mr. Heyer received a B.A. degree from Cornell
University and a M.B.A. degree from the Stern School of Management at New York
University.

COMMITTEES OF THE BOARD OF DIRECTORS

Executive Committee. Effective upon completion of the Offering, the Board of
Directors will establish an executive committee (the "Executive Committee"),
which will be granted such authority as may be determined from time to time by
a majority of the Board of Directors. The Company expects that the Executive
Committee will consist of Messrs. Gellein and Adler and at least one
independent director.

Audit Committee. Effective upon completion of the Offering, the Board of
Directors will establish an audit committee (the "Audit Committee"), which
will consist of two or more independent directors. The Audit Committee will be
established to make recommendations concerning the engagement of independent
public accountants, review with the independent public accountants the plans
and results of the audit engagement, approve professional services provided by
the independent public accountants, review the independence of the independent
public accountants, consider the range of audit and non-audit fees, and review
the adequacy of the Company's internal accounting controls.

Compensation Committee. Effective upon completion of the Offering, the Board
of Directors will establish a compensation committee (the "Compensation
Committee"), which will consist of two or more non-employee or independent
directors to the extent required by Rule 16b-3 under the Exchange Act and
Section 162(m) of the Code, to determine compensation for the Company's senior
executive officers.

Nominating Committee. Effective upon completion of the Offering, the Board
of Directors will establish a nominating committee (the "Nominating
Committee"), which will initially consist of Messrs. Gellein and Adler. The
function of the Nominating Committee will be to recommend to the full board of
Directors nominees for election as directors of the Company and the
composition of committees of the Board of Directors.

The Board of Directors of the Company initially will not have any other
committees.

CLASSIFIED BOARD OF DIRECTORS

The Company's Articles of Incorporation provide for the Company's Board of
Directors to be divided into three classes serving staggered terms so that
directors' initial terms will expire either on the date of the 1998, 1999 or
2000 annual meeting of shareholders. Messrs. Geller and Heyer will constitute
the class of directors having a term expiring at the 1998 annual meeting of
shareholders, Mr. Gellein will constitute the class of directors having a term
expiring on the date of the 1999 annual meeting of shareholders, and Messrs.
Adler and Harris will constitute the class of directors having a term expiring
on the date of the 2000 annual meeting of shareholders. Starting with the 1998
annual meeting of shareholders, one class of directors will be elected each
year for three-year terms. The classification of directors makes it more
difficult for a significant shareholder to change the composition of the Board
of Directors in a relatively short period of time and, accordingly, provides
the Board of Directors and shareholders time to review any proposal that a
significant shareholder may make and to pursue alternative courses of action
which the Board of Directors believes are fair to all of the shareholders of
the Company.

DIRECTOR COMPENSATION

Upon completion of the Offering, each initial director of the Company who is
not an employee of the Company or the beneficial owner of 5% or more of the
outstanding Common Stock ("Eligible Director") will be granted options to
purchase 45,000 shares of Common Stock at the Price to Public. Of such
options, options to purchase 15,000 shares of Common Stock will be exercisable
immediately upon grant, options to purchase 15,000 shares of Common Stock will
be exercisable immediately following the date of the 1998 annual meeting of
the Company's shareholders, and options to purchase the remaining 15,000
shares of Common Stock will be exercisable immediately following the date of
the 1999 annual meeting of the Company's shareholders. It is the intention of
the Company that (i) each initial director of the Company who is an Eligible
Director will also be granted options to purchase 5,000 shares of Common Stock
on the date of each scheduled annual meeting of the Company's shareholders
commencing immediately following the 2000 annual meeting of the Company's
shareholders and (ii) each new director of the Company who is an Eligible
Director, will be granted options to purchase 5,000 shares of Common Stock on
the date of each scheduled annual meeting of the Company's shareholders. See
"Management--Stock Plan."

In addition, each Eligible Director will be paid an annual fee of $18,000,
payable in equal quarterly installments.

DIRECTORS' AND OFFICERS' INSURANCE

The Company has applied for a directors' and officers' liability insurance
policy with coverage typical for a public company similar to the Company,
which policy will become effective upon the effectiveness of the registration
statement of which this Prospectus is a part. The directors' and officers'
liability insurance policy will insure (i) the officers and directors of the
Company from any claim arising out of an alleged wrongful act by such persons
while acting as officers and directors of the Company; (ii) the Company to the
extent it has indemnified the officers and directors for such loss; and (iii)
the Company for losses incurred in connection with claims made against the
Company for covered wrongful acts.

LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS

The Company has adopted provisions in its Articles of Incorporation that, to
the fullest extent provided under Florida law, limit the liability of its
directors and officers for monetary damages arising from a breach of their
fiduciary duties as directors or officers. Such limitation of liability does
not affect the availability of equitable remedies, such as injunctive relief
or rescission, nor does it limit liability for acts of fraud, knowing
violation of law, unlawful payment of distributions. Furthermore, equitable
remedies may not, as a practical matter, be effective for various reasons. The
Company's Articles of Incorporation and By-Laws also provide that the Company
shall indemnify its directors and officers to the fullest extent permitted by
Florida law, including circumstances in which indemnification is otherwise
discretionary to the Company under Florida law. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions or otherwise, the Company has been advised that in the opinion of
the Securities and Exchange Commission (the "Commission") such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable.

The Company has also agreed to indemnify each director and officer pursuant
to an Indemnity Agreement from and against any and all expenses, losses,
claims, damages and liabilities incurred by such director or officer for or as
a result of actions taken or not taken while such director or officer was
acting in his or her capacity as a director, officer, employee or agent of the
Company. In addition, the Company will maintain officers' and directors'
liability insurance which insures against liabilities that officers and
directors of the Company may incur in such capacities. See "--Directors' and
Officers' Insurance." The Company believes that these provisions are necessary
to attract and retain qualified persons to serve as directors and officers.

There is no pending litigation or proceeding involving a director, officer,
employee or agent of the Company where indemnification will be required or
permitted. The Company is not aware of any threatened litigation or proceeding
which may result in a claim for such indemnification.

EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth information with
respect to all compensation paid by the Company to the Company's Chief
Executive Officer and each of the other four most highly compensated executive
officers for the year ended December 31, 1996 (the "Named Executive
Officers").

ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------------
SECURITIES LTIP
UNDERLYING PAYOUTS OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR(1) SALARY BONUS(2) OPTIONS/SARS(3) (4) COMPENSATION(5)
- --------------------------- ------- ----------------------------------- -------- ---------------

Raymond L. Gellein, 1996 $ 530,204 -- -- -- $13,125
Jr.....................
Chairman of the Board
and
Co-Chief Executive
Officer
Jeffrey A. Adler........ 1996 $ 530,204 -- -- -- $13,125
President and Co-Chief
Executive Officer
Matthew E. Avril........ 1996 $ 225,000$ 52,360 180,000 $125,000 $ 8,840
Executive Vice
President, Chief
Operating Officer and
Chief Financial Officer
Susan Werth (6)......... 1996 $ 141,519 -- 75,000 -- $ 4,132
Senior Vice President,
General Counsel and
Secretary
Carol Lytle............. 1996 $ 225,000$ 99,921 180,000 $125,000 $ 2,400
Vice President

- --------
(1) In accordance with the rules of the Commission, only information with
respect to the most recently completed fiscal year is reported in the
Summary Compensation Table because the Company was not a reporting company
during the three immediately preceding fiscal years.
(2) Reflects amounts paid in 1996 in respect of the year ended December 31,
1995.
(3) Does not include options to acquire 400,000, 125,000 and 400,000 shares of
Common Stock granted by the Existing Shareholders to Mr. Avril, Ms. Werth
and Ms. Lytle, respectively. See "Principal and Selling Shareholders."
(4) Consists of deferred executive incentive compensation under a previous
plan.
(5) In accordance with the rules of the Commission, other compensation in the
form of perquisites and other personal benefits has not been separately
itemized because such perquisites and other personal benefits constituted
less than the lesser of $50,000 or 20% of the annual salary and bonus for
the named executive officer for such year.
(6) Ms. Werth's employment by the Company commenced in May 1996. Accordingly,
salary and bonus amounts reflect a partial year of employment.

The Company intends to enter into employment agreements with each of Messrs.
Gellein, Adler and Avril, Ms. Werth and Ms. Lytle which provide, among other
things, that from and after the completion of the offering, the annual base
salaries of Messrs. Gellein, Adler and Avril, Ms. Werth and Ms. Lytle will be
$360,000, $360,000, $250,000, $230,000 and $250,000, respectively. See "--
Employment Agreements."

Stock Option Grants in Last Fiscal Year. The following table contains
information concerning the grant of stock options made for the fiscal year
ended December 31, 1996 to the Named Executive Officers. The table also lists
potential realizable values of such options on the basis of assumed annual
compounded stock appreciation rates of 5% and 10% over the life of the options
which are set for a maximum of ten years.

INDIVIDUAL GRANTS

POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF SHARE
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(2)
OPTIONS GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME (1) FISCAL YEAR PER SHARE DATE 5% 10%
---- --------------- ------------- ----------- ---------- ---------- ----------

Raymond L. Gellein,
Jr..................... -- -- -- -- -- --
Jeffrey A. Adler........ -- -- -- -- -- --
Matthew E. Avril........ 180,000 33.6% $11.00 12/26/06 $1,245,211 $3,155,610
Susan Werth............. 75,000 14.0% $11.00 12/26/06 $ 518,838 $1,314,838
Carol Lytle............. 180,000 33.6% $11.00 12/26/06 $1,245,211 $3,155,610

- --------
(1) These options were granted with an exercise price equal to the fair market
value of the Common Stock on the date of grant as determined by the Board
of Directors. These options are nonqualified stock options, will vest in
equal amounts over four years and have a ten-year term. See "--Stock
Plan."

(2) The potential realizable value is reported net of the option price, but
before income taxes associated with exercise. These amounts represent
assumed annual compounded rates of appreciation of the shares of Common
Stock underlying each option at 5% and 10% from the date of grant to the
expiration date of the option.

STOCK PLAN

General. The Stock Plan was initially adopted by the Company in December
1996. The Stock Plan provides for the issuance of options to acquire up to
1,900,000 shares of Common Stock to employees, directors and officers of, and
consultants to, the Company and permits the Company to grant (i) shares of
Common Stock subject to transfer restrictions ("Restricted Stock"); (ii)
incentive stock options ("ISOs") within the meaning of Section 422 of the
Code; (iii) non-qualified stock options ("NSOs") ("ISOs" and "NSOs,"
individually, or collectively, "Options"); (iv) stock appreciation rights
("SARs"); and (v) phantom stock awards.

Purpose. The purpose of the Stock Plan is to foster the interests of the
Company and its shareholders by enabling employees, directors and officers of,
and consultants to, the Company to acquire a proprietary interest in the
Company and to provide an additional incentive for such persons to promote the
success of the Company's business.

Administration. The Stock Plan is administered by the Compensation Committee
of the Board, which selects the persons who will receive grants of awards
under the Stock Plan. The Committee is comprised of two or more outside
directors who are "non-employee directors" for purposes of Rule 16b-3 of the
Exchange Act and "independent directors" for purposes of Section 162(m) of the
Code. The Board appoints the members of the Compensation Committee, fills
vacancies on the Compensation Committee and has the power to replace members
of the Compensation Committee with other eligible persons at any time. The
Compensation Committee is authorized to make grants under the Stock Plan, to
determine the terms and conditions thereof and to otherwise administer and
interpret the Stock Plan.

Eligibility. Employees, directors and officers of, and consultants to, the
Company and its subsidiaries and affiliates are eligible to participate in the
Stock Plan and receive grants of awards thereunder. The selection of employees
who will receive grants under the Stock Plan (the "Participants") is in the
sole discretion of the Compensation Committee. The aggregate number of shares
of Common Stock that may be issued under Options, as restricted stock or upon
which SARs or phantom stock may be awarded to any Participant may not exceed
1,000,000.

Exercise Price of Options. The exercise price of any Option granted under
the Stock Plan is set in each case by the Compensation Committee; however, the
exercise price of any ISO may not be less than 100% of the fair market value
of the shares of Common Stock subject to the ISO on the date of grant (110% if
the ISO is granted to a greater than 10% shareholder of the Company).

Terms of Options. ISOs granted under the Stock Plan expire upon the earliest
to occur of (i) a period not to exceed ten years from the Option Date (as that
term is defined in the Stock Plan) (or five years if the ISO is granted to a
greater than 10% shareholder of the Company); (ii) the date on which the ISO
is forfeited under the terms of the Stock Plan due to termination of
employment (i.e., all nonvested Options are forfeited and expire upon
termination of a Participant's employment; (iii) with respect to vested and
nonvested options, the date on which the Participant's employment is
terminated for Cause (as defined in the Stock Plan); (iv) with respect to
vested Options, three months after the Participant's termination of employment
by the Company for any reason other than Cause, death or disability (within
the meaning of Section 22(a)(3) of the Code); or (v) twelve months after the
Participant's death or disability. The duration of NSOs granted under the
Stock Plan are identical to those of ISOs (except for the five year expiration
period for greater than 10% shareholders of the Company).

Exercise of Awards. Unless the Compensation Committee establishes a
different vesting schedule and except with respect to the automatic director
Options discussed below, Options, Restricted Stock, SARs and phantom stock
granted or awarded under the Stock Plan shall become 25% vested after 12
months from the grant or award date, and shall vest annually pro rata in
arrears over a period of three years thereafter. Notwithstanding the
foregoing, upon a Change in Control (as that term is defined in the Stock
Plan) all Options, Restricted Stock, SARs and phantom stock shall become 100%
vested and immediately exercisable. If a Participant's employment with the
Company, membership on the Board of Directors or retention as a consultant
terminates, all unvested grants and awards are forfeited. Under the Stock
Plan, upon the exercise of an Option, the optionee may make payment either in
cash, with shares of Common Stock having an aggregate fair market value on the
date of delivery equal to the exercise price, or by delivery of an irrevocable
commitment to use the proceeds of the sale of stock acquired from exercise of
the option. No Common Stock may be delivered upon the exercise of an Option
until full payment has been made for such shares. For individuals subject to
Rule 16b-3, any withholding obligation of the Company will be satisfied
automatically by the automatic withholding of shares of Common Stock otherwise
issuable to the Participant.

Director Options. Each initial director of the Company who is an Eligible
Director will automatically be granted NSOs to purchase 45,000 shares of
Common Stock for an exercise price per share equal to the Price to Public. Of
such NSOs, NSOs to purchase 15,000 shares of Common Stock will be exercisable
immediately upon grant, NSOs to purchase 15,000 shares of Common Stock will be
exercisable immediately following the date of the 1998 annual meeting of the
Company's shareholders (provided that such initial director continues to be a
director of the Company following such annual meeting) and NSOs to purchase
the remaining 15,000 shares of Common Stock will be exercisable immediately
following the date of the 1999 annual meeting of the Company's shareholders
(provided that such initial director continues to be a director of the Company
following such annual meeting).

In addition, it is the intention of the Company that (i) each initial
director of the Company who is an Eligible Director will also be granted
immediately-exercisable NSOs to purchase 5,000 shares of Common Stock
immediately following the date of each scheduled annual meeting of the
Company's shareholders commencing with the 2000 annual meeting of the
Company's shareholders (provided that such initial director continues to be a
director of the Company following such annual meeting) and (ii) each new
director of the Company who is an Eligible Director will be granted
immediately-exercisable NSOs to purchase 5,000 shares of Common Stock
immediately following the date of each scheduled annual meeting of the
Company's shareholders (provided that such director continues to be a director
of the Company following such annual meeting). The Company intends that the
exercise price of such NSOs will be the fair market value of the Common Stock
on the date of grant.

Unless the Compensation Committee establishes an earlier termination date,
NSOs granted to a director will expire ten years from the date of grant.

Grant of Options. In December 1996, the Company granted certain executive
officers and other employees of the Company options to purchase an aggregate
of 535,000 shares of Common Stock pursuant to the Stock Plan at an exercise
price of $11.00 per share. See "--Executive Compensation" and "--Employment
Agreements." Concurrently with the completion of the Offering, the Board of
Directors may grant to several employees of the Company (including the Named
Executive Officers) options to purchase additional shares of Common Stock
under the Stock Plan at an exercise price equal to the Price to Public,
including options to purchase 75,000 shares of Common Stock to Mr. Sabin.

Stock Appreciation Rights (SARs). Under the terms of the Stock Plan, the
Compensation Committee may, in its discretion, grant naked SARs and/or tandem
SARs to eligible Participants. A tandem SAR is an SAR that is granted in
connection with an Option and is exercisable only if the fair market value of
the Company's Common Stock on the date of surrender exceeds the Option Price
of the related ISO or the fair market value of the Common Stock on the Option
Date in the case of an NSO, and only to the extent that the related NSO or ISO
is exercisable. A Participant who elects to exercise a tandem SAR may
surrender the exercisable portion of related Options in exchange for a number
of shares of Common Stock determined by a formula in the Stock Plan. A naked
SAR is similar to a tandem SAR but it is not granted in connection with an
underlying Option and its terms are governed by the Participant's SAR
agreement.

Phantom Stock. Under the Stock Plan, the Compensation Committee may, in its
discretion, award phantom stock to eligible Participants and, in connection
therewith, grant the Participant the right to receive payments equal to
dividends paid on the Common Stock to which the phantom stock relates. Subject
to certain terms and limitations, an award of phantom stock entitles the
Participant to surrender all or part of the vested portion of such stock and
to receive from the Company the fair market value on the date of surrender of
the Common Stock to which the phantom stock relates.

Non-Assignability of Options, SARs and Phantom Stock. Options, SARs and
phantom stock granted under the Stock Plan are generally not transferable
other than by will or the then applicable laws of descent and distribution;
provided, however that Options, SARs and phantom stock may be transferred to
(i) any members of a Participant's immediate family and (ii) a trust which has
as its exclusive beneficiaries such Participant or members of such
Participant's immediate family.

Restricted Stock. In addition to Options, SARs and phantom stock, the
Compensation Committee may, in its discretion, make awards of restricted stock
to eligible Participants under the Stock Plan. A Participant may not sell or
transfer shares of restricted stock awarded under the Stock Plan and the
shares are subject to forfeiture in the event of the termination of the
Participant's employment with the Company or membership on the Board of
Directors prior to the vesting thereof. Notwithstanding the transfer
restrictions, the holder of restricted stock has the right to vote his or her
shares of restricted stock and to receive dividends in the same amount as
dividends paid on non-restricted shares of Common Stock.

Adjustment to Reflect Change in Capital Structure. If there is any change in
the corporate structure or shares of the capital stock of the Company, the
Board of Directors has the authority to make any adjustments necessary to
prevent accretion or to protect against dilution in the number and kind of
shares authorized by the Stock Plan or in the number and kind of shares
covered by awards thereunder.

Employee Stock Purchase Plan

The Company has established the Vistana, Inc. Employee Stock Purchase Plan
(the "Employee Stock Purchase Plan") to assist employees of the Company in
acquiring a stock ownership interest in the Company and to encourage them to
remain in the employment of the Company. The Employee Stock Purchase Plan is
neither a qualified pension, profit sharing or stock bonus plan under Section
401(a) of the Code, nor an "employee benefit plan" subject to the provisions
of the Employee Retirement Income Security Act of 1974, as amended. The
following discussion is a general summary of the material U.S. federal income
tax consequences to U.S. participants in the Employee Stock Purchase Plan. The
discussion is based on the Code, regulations thereunder, rulings and decisions
now in effect, all of which are subject to change. The summary does not
discuss

all aspects of federal income taxation that may be relevant to a particular
participant in light of such participant's personal investment circumstances.

The Employee Stock Purchase Plan is intended to meet the requirements of an
"employee stock purchase plan" under Section 423 of the Code. Neither the
grant of the right to purchase shares, nor the purchase of shares, under the
Employee Stock Purchase Plan has a federal income tax effect on employees or
the Company. Any United States tax liability to the employee and the tax
deductions to the Company are deferred until the employee sells the shares,
disposes of the shares by gift or dies. Under the Employee Stock Purchase
Plan, shares are generally purchased for 85% of the fair market value thereof,
as permitted by the Code.

In general, if shares are held for more than one year after they are
purchased and for more than two years from the beginning of the enrollment
period in which they are purchased or if the employee dies while owning the
shares, gain on the sale or other disposal of the shares constitutes ordinary
income to and employee (with no corresponding deduction to the Company) to the
extent of the lesser of (i) 15% of the fair market value of the shares at the
beginning of the enrollment period or (ii) the gain on sale of the amount by
which the market value of the shares on the date of sale, gift or death,
exceeds the purchase price. Any additional gain is capital gain. If the shares
are sold or disposed of within either or both of the holding periods, an
employee recognizes ordinary income (and the Company receives a corresponding
deduction subject to Section 162(m) of the Code) to the extent that the fair
market value of the shares at the date of exercise of the option exceeds the
option price. Any appreciation or depreciation after the date of purchase is
capital gain or loss.

A maximum of 1,000,000 shares of Common Stock will be reserved for issuance
under the Employee Stock Purchase Plan. The Employee Stock Purchase Plan will
be administered by the Compensation Committee.

OPTIONS GRANTED BY EXISTING SHAREHOLDERS

Effective upon completion of the Offering, the Existing Shareholders, pro
rata in accordance with the ownership of Common Stock, will grant to certain
executive officers and other employees of the Company options to acquire an
aggregate of 1,350,000 shares of Common Stock at an exercise price equal to
the Price to Public. These options will be exercisable in full at the date of
grant and will terminate ten years after the date of grant, subject to certain
exceptions. See "Principal and Selling Shareholders" and "Shares Eligible for
Future Sale."

401(K) PLAN

The Company has established a qualified retirement plan, with a salary
deferral feature designed to qualify under Section 401 of the Code (the
"401(k) Plan"). Employees of the Company are eligible to participate in the
401(k) Plan if they meet certain requirements concerning minimum age and
period of credited service. The 401(k) Plan allows participants to defer up to
15% of their compensation on a pre-tax basis subject to certain maximum
amounts. The 401(k) Plan allows the Company discretionary matching
contributions up to a maximum of 6% of the participant's compensation per
year. The Company has historically matched participant contributions in an
amount equal to 25 cents for each dollar of participant contributions and
expects to continue to do so. Certain other statutory limitations with respect
to the Company's contribution under the 401(k) Plan also apply. Amounts
contributed by the Company will vest over six years and will be held in trust
until distributed pursuant to the terms of the 401(k) Plan. All contributions
to the 401(k) Plan are invested in accordance with participant elections among
certain investment options. Distributions from participant accounts are not
permitted before an employee attains the age of 59 1/2, except in the event of
death, disability, certain financial hardships or termination of employment.

EMPLOYMENT AGREEMENTS

Prior to the completion of the Offering, the Company will enter into a new
employment agreement with each of Messrs. Gellein, Adler, Avril and Sabin, Ms.
Werth and Ms. Lytle for a term commencing on the completion of the Offering
and ending on the fourth anniversary of the Offering; however, each employee's

employment by the Company is terminable at any time by either party, with or
without cause. Pursuant to these agreements, Messrs. Gellein, Adler, Avril and
Sabin, Ms. Werth and Ms. Lytle will be entitled to receive an annual base
salary of $360,000, $360,000, $250,000, $210,000, $230,000 and $250,000,
respectively, as adjusted on March 1 of each year by the annual percentage
increase in the Consumer Price Index, All Urban Consumers for the Orlando,
Florida area. In addition, Messrs. Gellein, Adler, Avril and Sabin, and Ms.
Werth will be eligible to receive an annual performance bonus not to exceed
60%, 60%, 60%, 40% and 40%, respectively, of such employee's annual base
salary, based upon the Company's achievement of certain predetermined
performance goals. Ms. Lytle will be eligible to receive performance bonuses
based on the Company's achievement of certain operating goals. See
"Management--Executive Compensation." Upon termination of employment, the
employee will be entitled to unpaid compensation for services rendered through
the date of termination, together with employee benefits accrued through the
date of termination. In addition, if the employee's employment by the Company
is terminated, the employee will be entitled to receive certain severance
payments depending on the reason for termination (except with respect to
Messrs. Gellein and Adler who will not be entitled to any severance payments
unless the termination is without "cause").

The Company has also granted Mr. Avril, Ms. Werth and Ms. Lytle options to
purchase 180,000, 75,000 and 180,000 shares of Common Stock, respectively, at
an exercise price of $11.00 per share pursuant to the Stock Plan and has
agreed to grant Mr. Sabin options to purchase 75,000 shares of Common Stock
pursuant to the Stock Plan at an exercise price equal to the Price to Public.
See "--Executive Compensation."

Under the terms of the employment agreements, Messrs. Gellein, Adler, Avril
and Sabin, Ms. Werth and Ms. Lytle will be prohibited from disclosing any
confidential information or trade secrets of the Company. Messrs. Gellein,
Adler, Avril and Sabin, Ms. Werth and Ms. Lytle will also be prohibited,
during the term of their employment by the Company and for a period of one to
two years thereafter (depending on the reason for termination but, in all
events, two years for Messrs. Gellein and Adler) from (i) engaging in any
business or becoming employed or otherwise rendering services to any company
engaged in the timeshare or vacation ownership business and (ii) soliciting
the employment of any employees of the Company.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In addition to the transactions described under "Management--Employment
Agreements," the Company engaged in during its last fiscal year, or
contemplates engaging in during the current fiscal year, the transactions
described below.

Charles E. Harris, who has consented to become a director of the Company
upon completion of the Offering, is President and Chief Executive Officer and
a principal shareholder of Synagen. Synagen has served as financial advisor to
the Company and certain of the Existing Shareholders with respect to various
corporate transactions since 1991. During the years ended December 31, 1996
and 1995, the Company paid Synagen fees of $55,000 and $125,000, respectively.
No fees were paid to Synagen during 1994. The Company currently anticipates
that it will pay fees of approximately $280,000 to Synagen in connection with
the Offering prior to the date that Mr. Harris becomes a director of the
Company.

Mr. Harris is also President and Chief Executive Officer of Allen C. Ewing &
Co. ("Ewing"), and a principal shareholder of Ewing's parent holding company.
The Representatives (as defined herein) have agreed to include Ewing as one of
the Underwriters. See "Underwriting."

The Existing Shareholders, after giving effect to the Offering, will be the
owners of 70.5% of the Common Stock (approximately 66.1% if the Underwriters'
over-allotment option is exercised in full and all shares of Common Stock
subject thereto are sold solely by the Selling Shareholders). The Existing
Shareholders are currently parties to a Shareholders' Agreement which will
become effective upon completion of the Offering (the "Shareholders'
Agreement"). Pursuant to the Shareholders' Agreement, the Existing
Shareholders have agreed to vote their shares of Common Stock in favor of
proxies solicited by the Board of Directors, unless each of Messrs. Gellein
and Adler disagree with the position taken by the Board of Directors. The
Shareholders' Agreement contains restrictions on the disposition of Common
Stock and provides for certain rights of refusal. The Shareholders' Agreement
will terminate and be of no further force and effect upon the earliest to
occur of (i) the agreement of the Existing Shareholders to terminate the
Shareholders' Agreement; (ii) the tenth anniversary of the Offering; and (iii)
the date upon which one of the Existing Shareholders (treating all shares of
Common Stock beneficially owned by Mr. Gellein as held by one Existing
Shareholder and all shares of Common Stock beneficially owned by Mr. Adler as
held by one Existing Shareholder) fails to own 5% of the Common Stock. See
"Risk Factors--Control by Existing Shareholders Following the Offering;
Shareholder's Agreement."

Messrs. Gellein and Adler, their respective affiliates which own shares of
Common Stock and certain executive officers and other employees of the Company
are entitled, under certain circumstances, to require the Company to register
under the Securities Act shares of Common Stock owned by them or which they
may purchase upon exercise of options granted by the Existing Shareholders.
See "Principal and Selling Shareholders" and "Shares Eligible for Future
Sale."

The Company believes that all transactions disclosed above have been, and
the Company's Board of Directors intends that any future transactions with its
officers, directors, affiliates or principal shareholders will be, effected on
terms that are no less favorable to the Company than those which would
otherwise have been obtainable in arms' length transactions with unaffiliated
third parties.

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth information regarding the beneficial
ownership of the Common Stock of the Company giving effect to the consummation
of the Formation Transactions, and as adjusted to reflect the sale of Common
Stock offered hereby, with respect to (i) each person known by the Company to
beneficially own 5% or more of the outstanding Common Stock; (ii) each person
who is a director or Named Executive Officer of the Company; (iii) all
directors and executive officers of the Company as a group; and (iv) the
Selling Shareholders.

BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO THE OFFERING AFTER THE OFFERING
--------------------- NUMBER OF ------------------------
NUMBER OF SHARES NUMBER OF
NAME(1) SHARES(2) PERCENTAGE BEING OFFERED(3) SHARES PERCENTAGE(4)
------- ---------- ---------- ---------------- ---------- -------------

Raymond L. Gellein,
Jr.(5)................. 7,087,500 50.0% 462,500(6) 6,625,000 35.2%
Jeffrey A. Adler(7)..... 6,964,500 49.1% 462,500 6,502,000 34.6%
Laurence S. Geller(8)... -- -- -- 15,000 *
Charles E. Harris(8).... -- -- -- 15,000 *
Steven J. Heyer(8)...... -- -- -- 15,000 *
Matthew E. Avril(9)..... 400,000 2.8% -- 400,000 2.1%
Susan Werth(10)......... 125,000 * -- 125,000 *
Carol Lytle(11)......... 400,000 2.8% -- 400,000 2.1%
All directors and
executive officers as a
group (9 persons)(12).. 14,052,000 99.1% 925,000(13) 13,127,000 69.8%

- --------
* Less than 1%.
(1) The address of each director, executive officer and beneficial owner of
more than 5% of the currently outstanding shares of Common Stock is in
care of the Company, 8801 Vistana Centre Drive, Orlando, Florida 32821.
(2) For purposes of this table, a person or group of persons is deemed to
have "beneficial ownership" of any shares of Common Stock which such
person has the right to acquire within 60 days after the date of this
Prospectus. For purposes of computing the percentage of outstanding
shares of Common Stock held by each person or group of persons named
above, any security which such person or persons has or have the right to
acquire from the Company within 60 days after the date of this Prospectus
is deemed to be outstanding, but is not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person.

(3) Assumes no exercise of the Underwriters' over-allotment option. If the
Underwriters' over-allotment option is exercised in full and all shares
subject thereto are sold by the Selling Shareholders, an additional
416,250 shares of Common Stock beneficially owned by each of Messrs.
Gellein and Adler will be sold, and Messrs. Gellein and Adler will
beneficially own 33.0% and 32.4% of the total outstanding Common Stock,
respectively. See "Underwriting."
(4) Such amounts have been adjusted to reflect the issuance of the Common
Stock in the Offering.

(5) Includes (i) 3,883,950 shares (3,652,700 shares after giving effect to
the Offering) of Common Stock held by various trusts primarily for the
benefit of Mr. Gellein and members of his family and Mr. Gellein's former
spouse and members of her family; and (ii) 3,203,550 (2,972,300 after
giving effect to the Offering) shares of Common Stock held by the Raymond
L. Gellein, Jr. Revocable Trust, a trust for the benefit of Mr. Gellein.
Mr. Gellein, who serves as trustee of each of the foregoing trusts, has
exclusive authority to vote all shares of stock, including the Common
Stock, held thereby. Excludes an aggregate of 675,000 shares of Common
Stock subject to options granted to certain executive officers and other
employees of the Company. See notes (9), (10), (11) and (12) below.

(6) Includes 231,250 shares of Common Stock held by a trust primarily for the
benefit of Mr. Gellein's former spouse (439,375 shares of Common Stock if
the Underwriters' over-allotment option is exercised in full and all
shares subject thereto are sold by the Selling Shareholders).

(7) Includes (i) 110,000 shares of Common Stock held by various trusts
primarily for the benefit of Mr. Adler and members of his family; and
(ii) 6,854,500 shares (6,392,000 shares after giving effect to the
Offering)

of Common Stock held by the Jeffrey A. Adler Revocable Trust, a trust for
the benefit of Mr. Adler. Mr. Adler, who serves as trustee of each of the
foregoing trusts, has exclusive authority to vote all shares of stock,
including the Common Stock, held thereby. Excludes an aggregate of (i)
123,000 shares of Common Stock held by various trusts, of which Mr. Adler
is not trustee, for the benefit of Mr. Adler's spouse and children; and
(ii) 675,000 shares of Common Stock subject to options granted to certain
executive officers and other employees of the Company. See notes (9), (10),
(11) and (12) below.
(8) Represents 15,000 shares of Common Stock which may be acquired upon
exercise of options granted under the Stock Plan. Excludes 30,000 shares
of Common Stock issuable pursuant to options granted under the Stock
Plan which are not exercisable within 60 days of the date of this
Prospectus. Messrs. Geller and Heyer have indicated that they intend to
purchase shares of Common Stock in the Offering.
(9) Represents 400,000 shares of Common Stock which may be acquired upon
exercise of options granted by the Existing Shareholders, which options
were granted in December 1996 at an exercise price equal to the Price to
Public. Excludes options to acquire 180,000 shares of Common Stock
granted by the Company in December 1996 pursuant to the Stock Plan which
are not exercisable within 60 days of the date of this Prospectus.
(10) Represents 125,000 shares of Common Stock which may be acquired upon
exercise of options granted by the Existing Shareholders, which options
were granted in December 1996 at an exercise price equal to the Price to
Public. Excludes options to acquire 75,000 shares of Common Stock granted
by the Company in December 1996 pursuant to the Stock Plan, which are not
exercisable within 60 days of the date of this Prospectus.
(11) Represents 400,000 shares of Common Stock which may be acquired upon
exercise of options granted by the Existing Shareholders, which options
were granted in December 1996 at an exercise price equal to the Price to
Public. Excludes options to acquire 180,000 shares of Common Stock
granted by the Company in December 1996 pursuant to the Stock Plan which
are not exercisable within 60 days of the date of this Prospectus.

(12) Represents (i) 14,175,000 shares of Common Stock owned by the Existing
Shareholders, (13,250,000 after giving effect to the Offering); (ii) an
aggregate of 950,000 shares of Common Stock which may be acquired upon
exercise of options granted by the Existing Shareholders; and (iii)
45,000 shares of Common Stock which may be acquired upon exercise of
options granted under the Stock Plan. Excludes options to acquire an
aggregate of 535,000 shares of Common Stock granted by the Company in
December 1996 pursuant to the Stock Plan, which are not exercisable
within 60 days of the date of this Prospectus. See "Management--Stock
Plan."

(13) Assumes no exercise of the Underwriters' over-allotment option. If the
Underwriters' over-allotment option is exercised in full and all shares
subject thereto are sold by the Selling Shareholders, an additional
832,500 shares of Common Stock beneficially owned by all directors and
officers as a group will be sold and such persons will beneficially own
65.4% of the total outstanding Common Stock.

DESCRIPTION OF CAPITAL STOCK

Upon the completion of the Offering and the consummation of the Formation
Transactions, the authorized capital stock of the Company will consist of (i)
100,000,000 shares of Common Stock, par value $0.01 per share, 18,800,000
shares of which will be outstanding after completion of the Offering and the
Formation Transaction, and (ii) 5,000,000 shares of Preferred Stock, par value
$0.01 per share, none of which will be outstanding after the Offering and the
Formation Transactions. The following summary description of the capital stock
of the Company is qualified in its entirety by reference to the Articles of
Incorporation and By-Laws of the Company, copies of which are filed as
exhibits to the Registration Statement of which this Prospectus is a part. See
"Additional Information."

COMMON STOCK

The rights of the holders of the Common Stock discussed below are subject to
such rights as the Board of Directors may hereafter confer on the holders of
the preferred stock; accordingly, rights conferred on holders of preferred
stock issued under the Articles of Incorporation may adversely affect the
rights of holders of the Common Stock.

Subject to the rights of holders of preferred stock, the holders of
outstanding shares of Common Stock are entitled to receive dividends out of
assets legally available therefor, at such times and in such amounts as the
Board of Directors may from time to time determine. See "Dividend Policy." The
shares of Common Stock are neither redeemable nor convertible and the holders
thereof have no preemptive or subscription rights to purchase any securities
of the Company. Upon liquidation, dissolution or winding up of the Company,
the holders of Common Stock are entitled to receive, pro rata, the assets of
the Company that are legally available for distribution, after payment of all
debts and other liabilities and subject to the prior rights of any holders of
preferred stock then outstanding. Each outstanding share of Common Stock is
entitled to one vote on all matters submitted to a vote of shareholders. There
is no cumulative voting in the election of directors.

PREFERRED STOCK

The Articles of Incorporation authorize the Board of Directors to issue
preferred stock in classes or series and to establish the designations,
preferences, qualifications, limitations or restrictions of any class or
series with respect to, among other things, the rate and nature of dividends,
the price, terms and conditions on which shares may be redeemed, the terms and
conditions for conversion or exchange into any other class or series of the
stock and voting rights. The Company will have authority, without approval of
the holders of Common Stock, to issue preferred stock that has voting,
dividend or liquidation rights superior to the Common Stock and that may
adversely affect the rights of holders of Common Stock. The issuance of
preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things,
adversely affect the voting power of the holders of Common Stock and could
have the effect of delaying, deferring or preventing a change in control of
the Company. The Company currently has no plans to issue any shares of
preferred stock.

CLASSIFICATION OF THE BOARD OF DIRECTORS

The Company's Articles of Incorporation provides that the number of
directors of the Company shall be established by the By-Laws but shall not be
less than the minimum number required by the FBCA. The By-Laws currently
provide that the Board of Directors will consist of not fewer than five nor
more than nine members. The Company's Articles of Incorporation and By-Laws
provide for a staggered Board of Directors consisting of three classes as
nearly equal in size as practicable. One class will hold office initially for
a term expiring on the date of the annual meeting of the Company's
shareholders to be held in 1998, another class will hold office initially for
a term expiring on the date of the annual meeting of the Company's
shareholders to be held in 1999 and another class will hold office initially
for a term expiring on the date of the annual meeting of the Company's
shareholders to be held in 2000. As the term of each class expires, directors
for that class will be elected for a term of three years and until their
successors are duly elected and qualify.

The provisions of the Articles of Incorporation and the By-Laws summarized
in the preceding paragraphs and the provisions of the Florida Business
Corporation Act (the "FBCA") contain provisions that may have the effect of
delaying, deferring or preventing a non-negotiated merger or other business
combination involving the Company. These provisions are intended to encourage
any person interested in acquiring the Company to negotiate with and obtain
the approval of the Board of Directors in connection with the transaction.
Certain of these provisions may, however, discourage a future acquisition of
the Company not approved by the Board of Directors in which shareholders might
receive an enhanced value for their shares or that a substantial number or a
majority of the Company's shareholders might believe to be in their best
interest. As a result, shareholders who desire to participate in such a
transaction may not have the opportunity to do so. Such provisions could also
discourage bids for the Common Stock at a premium, as well as create a
depressive effect on the market price of the Common Stock.

CERTAIN PROVISIONS OF FLORIDA LAW

The Company is subject to several anti-takeover provisions that apply to a
public corporation organized under the FBCA, unless the corporation has
elected to opt out of those provisions in its articles of incorporation or by-
laws. The Company has not elected to opt out of those provisions. Subject to
certain exceptions, the FBCA prohibits the voting of shares in a publicly-held
Florida corporation that are acquired in a "control share acquisition" unless
the holders of a majority of the corporation's voting shares (exclusive of
shares held by officers of the corporation, inside directors or the acquiring
party) approve the granting of voting rights as to the shares acquired in the
control share acquisition. A "control share acquisition" is defined as an
acquisition that immediately thereafter entitles the acquiring party to vote
in the election of directors within each of the following ranges of voting
power: (i) one-fifth or more but less than one-third of such voting power;
(ii) one-third or more but less than a majority of such voting power; and
(iii) more than a majority of such voting power.

Subject to certain exceptions, the FBCA also contains an "affiliated
transaction" provision that prohibits a corporation organized under the FBCA
from engaging in a broad range of business combinations or other extraordinary
corporate transactions with an "interested shareholder" unless: (i) the
transaction is approved by a majority of disinterested directors before the
person becomes an interested shareholder; (ii) the interested shareholder has
owned at least 80% of the corporation's outstanding voting shares for at least
five years; or (iii) the transaction is approved by the holders of two-thirds
of the corporation's voting shares other than those owned by the interested
shareholder. An interested shareholder is defined as a person who together
with affiliates and associates beneficially owns more than 10% of the
corporation's outstanding voting shares.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is .

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering and the Formation Transactions, the Company
will have outstanding 18,800,000 shares of Common Stock. Of these shares, the
5,550,000 shares sold in the Offering plus any additional shares sold upon
exercise of the Underwriters' over-allotment option will be freely tradable in
the public market without restriction or further registration under the
Securities Act.

The remaining 13,250,000 outstanding shares of Common Stock were issued
pursuant to the Formation Transactions and are "restricted securities" as that
term is defined under Rule 144 of the Securities Act and may be sold only
pursuant to registration under the Securities Act or pursuant to an exemption
therefrom, such as that provided by Rule 144. In general, under Rule 144 as
currently in effect, if two years have elapsed since the later of the date of
acquisition of shares of Common Stock from the Company or the date of
acquisition of shares of Common Stock from any "affiliate" of the Company, as
that term is defined under the Securities Act, the acquiror or subsequent
holder is entitled to sell within any three-month period a number of shares of
Common

Stock that do not exceed the greater of (i) 1% of the then-outstanding shares
of Common Stock and (ii) the average weekly trading volume of shares of Common
Stock on all exchanges and reported through the automated quotation system of
a registered securities association during the four calendar weeks preceding
the date on which notice of the sale is filed with the Commission. Sales under
Rule 144 are also subject to certain restrictions on the manner of sales,
notice requirements and the availability of current public information about
the Company. If three years have elapsed since the date of acquisition of
shares of Common Stock from the Company or from any "affiliate" of the
Company, and the acquiror or subsequent holder thereof is deemed not to have
been an affiliate of the Company at any time during the 90 days preceding a
sale, such person would be entitled to sell such shares of Common Stock in the
public market under Rule 144(k) without regard to the volume limitations,
manner of sale provisions, public information requirements or notice
requirements.

Following the Offering, the Company intends to file under the Securities Act
a registration statement on Form S-8 to register all of the shares of Common
Stock subject to outstanding options under the Stock Plan and reserved for
future grants under the Stock Plan. This registration statement is expected to
become effective upon filing and shares covered by this registration statement
will be eligible for sale, subject, in the case of affiliates only, to the
restrictions of Rule 144, other than the holding period requirement, and
subject to the expiration of the lock-up agreements with the Underwriters. As
of December 31, 1996, although options to acquire an aggregate of 535,000
shares of Common Stock had been granted under the Stock Plan, none of such
options were currently exercisable.

The Company has entered into a Registration Rights Agreement (the
"Registration Rights Agreement") with the Existing Shareholders and certain
executive officers and other employees of the Company pursuant to which the
Company is obligated to register the shares owned by such persons under the
Securities Act at specified times and in specified amounts. Specifically, the
Company, subject to certain exceptions and limitations, will, upon request, be
required (i) at any time after the third anniversary of the Offering, to
register all or a portion of the Common Stock (not to exceed 15% of the then
outstanding Common Stock on any one occasion) owned by each of Messrs. Gellein
and Adler on up to two separate occasions each in connection with an
underwritten offering of any such Common Stock; (ii) at the beginning of each
of the first two 12-month periods following the second anniversary of the
Offering, to register up to 50% of the Common Stock held, or acquirable
pursuant to the exercise of options granted by the Existing Shareholders, by
each of the parties to the Registration Rights Agreement, other than the
Existing Shareholders, on a delayed or continuous basis, but not as part of an
underwriting (a "Shelf Registration") at the beginning of each of the 12 month
periods following the second anniversary of the completion of the Offering;
provided, however, that the number of shares included in any such Shelf
Registration may not exceed a maximum of 5% of the then outstanding Common
Stock; (iii) to register all of the shares of Common Stock held, or acquirable
pursuant to the exercise of options granted by the Existing Shareholders, by
each party to the Registration Rights Agreement, other than the Existing
Shareholders, pursuant to a Shelf Registration in the event of such party's
death or disability, such party's termination of employment by the Company
without cause or a change in control (as defined in the Registration Rights
Agreement). The Company is required to use its best efforts to keep all
registration statements relating to Shelf Registrations effective until the
Common Stock included therein has been sold.

Under the Registration Rights Agreement, subject to certain exception and
limitations, if the Company proposes to register any of its securities under
the Securities Act for its own account or the account of another person
pursuant to an underwriting, the parties to the Registration Rights Agreement
may require the Company to include in such registration all or part of the
shares of Common Stock held by such persons after completion of the Offering.
An aggregate of 925,000 shares of Common Stock are being registered by the
Existing Shareholders in the Offering (1,757,500 shares of Common Stock if the
Underwriter's over-allotment option is exercised in full and all shares
subject thereto are sold by the Selling Stockholders).

The Company is required to pay all expenses incident to the performance of
its obligations under the Registration Rights Agreement, other than any
underwriting discounts and commissions, or transfer taxes relating to shares
of Common Stock registered pursuant thereto.

Each party to the Registration Rights Agreement has agreed that if such
holder is requested by an underwriter in an underwritten offering of the
Company's securities (whether for the account of the Company or otherwise),
not to effect any public sale or distribution of any shares of Common Stock or
other Company equity securities, including a sale pursuant to Rule 144, during
the 10-day period prior to, and during the 90-day period beginning on, the
closing date of such underwritten offering. In addition, each of Messrs.
Gellein and Adler have agreed not exercise their rights to require the Company
to register all or a portion of the Common Stock owned by them more than once
during any 360-day period.

Prior to the Offering, there has been no public market for the Common Stock
and the effect, if any, that future market sales of Common Stock or the
availability of such Common Stock for sale will have on the market price of
the Common Stock prevailing from time to time cannot be predicted.
Nevertheless, sales of substantial amounts of Common Stock in the public
market (or the perception that such sales could occur) might adversely affect
market prices for the Common Stock.

UNDERWRITING

The Underwriters named below (the "Underwriters"), represented by Montgomery
Securities and Smith Barney Inc. (the "Representatives"), have severally
agreed, subject to the terms and conditions of the underwriting agreement (the
"Underwriting Agreement") by and among the Company, the Selling Shareholders
and the Underwriters to purchase from the Company and the Selling Shareholders
the number of shares of Common Stock indicated below opposite their respective
names, at the initial public offering price less the underwriting discounts
and commissions set forth on the cover page of this Prospectus. The
Underwriting Agreement provides that the obligations of the Underwriters are
subject to certain conditions precedent and that the Underwriters are
committed to purchase all of the shares of Common Stock if they purchase any.

NUMBER OF
SHARES TO BE
UNDERWRITER PURCHASED
----------- ------------

Montgomery Securities........................................
Smith Barney Inc. ...........................................
---
Total......................................................
===

The Underwriters, through the Representatives, have advised the Company and
the Selling Shareholders that the Underwriters propose initially to offer the
shares of Common Stock to the public at a public offering price set forth on
the cover page of this Prospectus. The Underwriters may allow selected dealers
a concession of not more than $ per share; the Underwriters may allow, and
such dealers may reallow, a concession of not more than $ per share to
certain other dealers. After the initial public offering, the public offering
price and other selling terms may be changed by the Representatives.

The Company and the Selling Shareholders have granted an option to the
Underwriters, exercisable during the 30-day period after the date of this
Prospectus, to purchase up to an aggregate maximum of 832,500 additional
shares of Common Stock, to cover over-allotments, if any, at the same price
per share as the initial shares to be purchased by the Underwriters. Pursuant
to the terms of the option, the Selling Shareholders have the right to sell
all or any part of the shares to be sold the Underwriters, and the Company has
the obligation to sell to the Underwriters the difference between the amount
sold by the Selling Shareholders and the aggregate amount of shares required
to satisfy the Underwriters' option exercise. To the extent that the
Underwriters exercise this option, the Underwriters will be committed, subject
to certain conditions, to purchase such additional shares in approximately the
same proportion as set forth in the above table. The Underwriters may purchase
such shares only to cover over-allotments made in connection with the
Offering.

The Underwriting Agreement provides that the Company and the Selling
Shareholders will indemnify the Underwriters against certain liabilities,
including civil liabilities under the Securities Act, or will contribute to
payments the Underwriters may be required to make in respect thereof.

The directors, Existing Shareholders, officers and certain other employees
of the Company have agreed, with certain exceptions, that, for a period of one
year from the date of this Prospectus, they will not sell, offer to sell,
contract to sell, or otherwise sell or dispose of any shares of their Common
Stock, or options or warrants to acquire shares of Common Stock, without the
prior written consent of Montgomery Securities. The Company has agreed not to
sell any shares of Common Stock for a period of 180 days from the date of this
Prospectus without the prior written consent of Montgomery Securities.

The Representatives have informed the Company that they do not intend to
confirm sales to accounts over which they exercise discretionary authority in
excess of 5% of the number of shares of Common Stock offered hereby.

Out of the 5,550,000 shares of Common Stock to be sold pursuant to the
Offering, the Underwriters have accepted the Company's request to sell up to
5% of such shares at the public offering price set forth on the cover page to
employees and other persons designated by the Company. Such shares of Common
Stock may be disposed of without contractual or other restriction by the
purchasers thereof, subject to any legal limitations imposed on such purchaser
as a result of his or her relationship to the Company (i.e., a director or
executive director).

Prior to the Offering, there has been no public trading market for the
Common Stock. Consequently, the initial public offering price will be
determined by negotiations among the Company and the Representatives of the
Underwriters. Among the factors to be considered in such negotiations will be
the history of, and the prospects for, the Company and the industry in which
it competes, an assessment of the Company's management, its past and present
earnings and the trend of such earnings, the prospects for future earnings of
the Company, the present state of the Company's development, the general
condition of securities markets at the time of the Offering and the market
price of publicly traded stocks of comparable companies in recent periods.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company and the Selling Shareholders by Neal, Gerber & Eisenberg, Chicago,
Illinois in reliance, as to matters of Florida corporate law, on the opinion
of Dean, Mead, Egerton, Bloodworth, Capouano & Bozarth, P.A., as to matters of
Florida law governing the vacation ownership industry, on the opinion of Baker
& Hostetler LLP, and, as to matters of South Carolina law governing the
vacation ownership industry, on the opinion of Kennedy Covington Lobdell &
Hickman, L.L.P. In connection with the Offering, certain attorneys of Neal,
Gerber & Eisenberg intend to purchase shares of Common Stock at the Price to
Public, which constitute a portion of the shares reserved by the Underwriters
for sale at the Price to Public to certain employees and other persons
designated by the Company. Certain legal matters in connection with the
Offering will be passed upon for the Underwriters by O'Melveny & Myers LLP,
San Francisco, California in reliance, as to matters of Florida corporate law,
on the opinion of Dean, Mead, Egerton, Bloodworth, Capouano & Bozarth, P.A.,
as to matters of Florida law governing the vacation ownership industry, on the
opinion of Baker & Hostetler LLP, and, as to matters of South Carolina law
governing the vacation ownership industry, on the opinion of Kennedy Covington
Lobdell & Hickman, L.L.P.

EXPERTS

The Combined Financial Statements of Vistana, Inc. as of December 31, 1995
and 1996 and for each of the years in the three-year period ended December 31,
1996 included elsewhere in this Prospectus have been audited by KPMG Peat
Marwick LLP, independent auditors, as set forth in their reports appearing
elsewhere herein. The financial statements and certain of the information as
described in the selected combined financial information section of this
prospectus have been so included in reliance upon such reports given upon the
authority of such firm as experts in auditing and accounting.

ADDITIONAL INFORMATION

The Company has filed with the Commission under the Securities Act a
Registration Statement on Form S-1 with respect to the Common Stock offered
hereby. This Prospectus, which constitutes part of the Registration Statement,
omits certain of the information contained in the Registration Statement and
the exhibits and schedules thereto on file with the Commission pursuant to the
Securities Act and the rules and regulations of the Commission thereunder. For
further information with respect to the Common Stock and the Common Stock,
reference is made to the Registration Statement and the exhibits and schedules
thereto. The Registration Statement, including exhibits and schedules thereto,
may be inspected and copied at the public reference facilities maintained by
the Commission, including at the Commission's Public Reference Room, 450 Fifth
Street, NW, Judiciary Plaza, Washington, D.C. 20549, and at the Commission's
Regional Offices at 7 World Trade Center, Suite 1300, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies may be obtained at prescribed rates from the Public Reference
Section of the Commission as its principal office in Washington, D.C. Such
materials also may be accessed electronically by means of the Commission's
home page on the Internet at http://www.sec.gov.

Statements contained in this Prospectus as to the contents of any contract
or other document referred to are not necessarily complete and in each
instance reference is made to the copy of such contract or other documents
filed as an exhibit to the Registration Statement, each such statement being
qualified in its entirety by such reference.

INDEX TO FINANCIAL STATEMENTS

Combined Financial Statements:
Independent Auditors' Report............................................. F-2
Combined Balance Sheets as of December 31, 1995 and 1996................. F-3
Combined Statements of Income for the Years Ended December 31, 1994, 1995
and 1996................................................................ F-4
Combined Statements of Equity for the Years Ended December 31, 1994, 1995
and 1996................................................................ F-5
Combined Statements of Cash Flows for the Years Ended December 31, 1994,
1995 and 1996........................................................... F-6
Notes to Combined Financial Statements................................... F-7

F-1

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
Vistana, Inc. and Combined Affiliates:

We have audited the combined balance sheets of Vistana, Inc. and Combined
Affiliates (the "Company") as of December 31, 1995 and 1996 and the related
combined statements of income, equity and cash flows for each of the years in
the three-year period ended December 31, 1996. These combined financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Vistana, Inc. and
Combined Affiliates as of December 31, 1995 and 1996 and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1996, in conformity with generally accepted accounting
principles.

/s/ KPMG Peat Marwick LLP

Orlando, Florida

January 24, 1997

F-2

VISTANA, INC. AND COMBINED AFFILIATES

COMBINED BALANCE SHEETS

(UNAUDITED)
PRO FORMA
NOTE 2(B)
DECEMBER 31, DECEMBER 31,
------------------------- ------------
1995 1996 1996
------------ ------------ ------------

Cash and cash equivalents.............. $ 7,543,036 $ 6,133,872 $ 3,633,872
Restricted cash........................ 3,244,873 3,847,374 3,847,374
Customer mortgages receivable, net..... 80,493,952 100,165,656 100,165,656
Other receivables, net................. 2,805,502 4,111,384 4,111,384
Inventory of Vacation Ownership Inter-
ests.................................. 9,607,814 16,540,469 16,540,469
Construction in progress............... 8,694,684 8,670,104 8,670,104
------------ ------------ ------------
Total Vacation Ownership Interests... 18,302,498 25,210,573 25,210,573
------------ ------------ ------------
Prepaid expenses and other assets...... 7,548,877 13,978,455 13,978,455
Investment in limited partnerships..... 5,058,710 -- --
Land held for development.............. 4,297,121 8,080,062 8,080,062
Property and equipment, net............ 11,356,914 12,395,090 12,395,090
------------ ------------ ------------
Total assets......................... $140,651,483 $173,922,466 $171,422,466
============ ============ ============
Accounts payable and accrued liabili-
ties.................................. 4,905,831 3,828,794 3,828,794
Accrued compensation and benefits...... 8,552,982 9,291,354 9,291,354
Customer deposits...................... 2,349,357 4,994,766 4,994,766
Repurchase obligations................. 3,002,847 -- --
Other liabilities...................... 2,432,399 6,160,284 6,160,284
Notes and mortgages payable............ 101,503,639 118,556,609 118,556,609
------------ ------------ ------------
Total liabilities.................... 122,747,055 142,831,807 142,831,807
Minority interest...................... -- 4,442,618 4,442,618
Equity................................. 17,904,428 26,648,041 24,148,041
------------ ------------ ------------
Total liabilities and equity......... $140,651,483 $173,922,466 $171,422,466
============ ============ ============

See accompanying notes to combined financial statements

F-3

VISTANA, INC. AND COMBINED AFFILIATES

COMBINED STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31,
-----------------------------------
1994 1995 1996
----------- ----------- -----------

Revenues:
Vacation Ownership Interest sales....... $54,186,316 $50,156,397 $60,063,413
Interest................................ 7,654,323 12,886,189 15,546,269
Resort.................................. 11,834,044 12,613,242 13,586,648
Telecommunications...................... 3,377,865 4,802,025 7,053,647
Other................................... 583,765 652,039 686,263
----------- ----------- -----------
Total revenues............................ 77,636,313 81,109,892 96,936,240
----------- ----------- -----------
Costs and operating expenses:
Vacation Ownership Interests cost of
sales.................................. 11,390,644 12,052,497 14,595,630
Sales and marketing..................... 22,871,809 22,318,165 27,876,872
Interest expense--treasury.............. 3,605,227 6,515,497 6,864,713
Provision for doubtful accounts......... 3,802,905 3,522,316 4,270,887
Resort.................................. 10,036,963 10,585,320 11,089,385
Telecommunications...................... 2,519,980 3,654,386 5,613,336
General and administrative.............. 7,988,613 6,979,337 7,872,795
Depreciation and amortization........... 1,391,638 2,215,274 2,553,443
Interest expense--other................. 2,105,869 3,167,975 4,153,749
Other................................... 1,240,971 1,019,986 442,724
Deferred executive incentive compensa-
tion................................... 332,078 3,447,945 1,113,829
----------- ----------- -----------
Total costs and operating expenses........ 67,286,697 75,478,698 86,447,363
----------- ----------- -----------
Operating income.......................... 10,349,616 5,631,194 10,488,877
Excess value recognized................. 364,952 219,095 105,101
----------- ----------- -----------
Net Income................................ $10,714,568 $ 5,850,289 $10,593,978
=========== =========== ===========
Pro-forma data (unaudited):
Net income before taxes................. 10,714,568 5,850,289 10,593,978
Pro-forma provision for income taxes.... 3,984,000 2,126,000 3,723,000
----------- ----------- -----------
Pro-forma net income.................. $ 6,730,568 $ 3,724,289 $ 6,870,978
=========== =========== ===========
Pro-forma net income per share of Common
Stock.................................... $ .48
===========
Pro-forma weighted average number of
shares of Common Stock outstanding....... 14,175,000
===========

See accompanying notes to combined financial statements.

F-4

VISTANA, INC. AND COMBINED AFFILIATES

COMBINED STATEMENTS OF EQUITY

EQUITY
-----------

Balance at January 1, 1994......................................... $23,725,801
Distributions...................................................... (782,558)
Net income......................................................... 10,714,568
-----------
Balance at December 31, 1994....................................... 33,657,811
Distributions/redemptions.......................................... (21,603,672)
Net income......................................................... 5,850,289
-----------
Balance at December 31, 1995....................................... 17,904,428
Distributions...................................................... (1,850,365)
Net income......................................................... 10,593,978
-----------
Balance at December 31, 1996....................................... $26,648,041
===========

See accompanying notes to combined financial statements.

F-5

VISTANA, INC. AND COMBINED AFFILIATES

COMBINED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
-------------------------------------
1994 1995 1996
----------- ----------- -----------

Operating activities:
Net income................................ $10,714,568 $ 5,850,289 $10,593,978
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense.................... 1,035,874 1,306,025 1,474,809
Amortization expense.................... 355,764 909,249 1,078,634
Amortization of discount on customer
mortgages receivable................... -- 2,061,541 2,756,905
Provision for doubtful accounts......... 3,802,905 3,522,316 4,270,887
Changes in operating assets and liabili-
ties:
Other receivables..................... (127,354) (268,293) (1,305,882)
Construction in progress.............. (3,954,546) (1,082,427) (358,924)
Prepaid expenses and other assets..... 56,254 (3,759,668) (7,508,212)
Accounts payable and accrued liabili-
ties................................. 839,216 (68,720) (1,077,037)
Accrued compensation and benefits..... 90,708 4,750,413 738,372
Customer deposits..................... 54,339 682,103 2,645,409
Repurchase obligations................ (834,849) (1,603,975) (1,407,880)
Other liabilities..................... 1,182,091 224,754 3,727,885
----------- ----------- -----------
Net cash provided by operating activ-
ities............................... 13,214,970 12,523,607 15,628,944
----------- ----------- -----------
Investing activities:
Expenditures for property and equipment... (1,290,568) (2,043,490) (2,512,985)
Sale of customer mortgages receivable..... 6,557,769 -- --
Repurchase of customer mortgages receiv-
able..................................... -- (1,692,083) (1,170,691)
Origination of customer mortgages receiv-
able..................................... (25,345,638) (17,994,446) (22,065,062)
Additions to restricted cash.............. (304,839) (920,994) (602,501)
----------- ----------- -----------
Net cash used in investing activi-
ties................................. (20,383,276) (22,651,013) (26,351,239)
----------- ----------- -----------
Financing activities:
Proceeds from notes and mortgages pay-
able..................................... 51,511,207 79,345,191 53,628,415
Payments on notes and mortgages payable... (44,216,204) (42,610,975) (46,907,537)
Equity distributions/redemptions.......... (782,558) (21,603,672) (1,850,365)
Minority interest......................... -- -- 4,442,618
----------- ----------- -----------
Net cash provided by financing activi-
ties................................... 6,512,445 15,130,544 9,313,131
----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents............................ (655,861) 5,003,138 (1,409,164)
Cash and cash equivalents, beginning of
year....................................... 3,195,759 2,539,898 7,543,036
----------- ----------- -----------
Cash and cash equivalents, end of year...... $ 2,539,898 $ 7,543,036 $ 6,133,872
=========== =========== ===========
Supplemental disclosure of cash flow infor-
mation:
Cash paid during the year for interest.... $ 5,674,646 $ 9,728,802 $10,731,633
=========== =========== ===========

See accompanying notes to combined financial statements.

F-6

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 1995 AND 1996

(1) NATURE OF BUSINESS

The Company (see Note (2)(a)) generates revenues from the sale and financing
of Vacation Ownership Interests in its resort properties which typically
entitle the buyer to ownership of a fully-furnished unit for a one week period
on an annual or an alternate-year basis. The Company's principal operations
consist of (1) constructing, furnishing, marketing and selling vacation
ownership interests, (2) providing consumer financing for the purchase of
Vacation Ownership Interests at its resorts, and (3) managing the operations
of its resorts and related amenities, and the installation and maintenance of
telecommunications equipment for others on a limited basis. The Company sells
Vacation Ownership Interests to both domestic and foreign purchasers. All
contracts relating to the sale of Vacation Ownership Interests are denominated
in U.S. dollars.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Principles of Combination and Formation Transaction

The combined financial statements include the accounts of Vistana, Inc. and
certain wholly owned affiliates (both corporations and limited partnerships)
under common control (the "Company"). It is anticipated that in conjunction
with and conditioned upon the Offering that each of the Existing Shareholders
will transfer to the Company all of the existing common stock and partnership
interests owned by them and their affiliates in exchange for 14,174,980 shares
(20 shares of the Common Stock of Vistana, Inc. are currently outstanding) of
the Company ("Formation Transaction"). It is anticipated that a total of
5,550,000 shares of the Common Stock of the Company will be offered to the
public, comprising 4,625,000 shares to be offered by the Company and 925,000
shares by the Existing Shareholders. No assurances can be given that the
Offering will be consummated.

The majority of the combined affiliates were formed in 1991 by the current
owners to acquire and own, either directly or indirectly, the assets and
certain liabilities of the predecessor operating entities from the previous
owner hereinafter referred to as the "Seller".

The combined financial statements also include the accounts of two
partnerships between one or more affiliated companies and unaffiliated third
party partners wherein the Company exercises operational and financial control
over such partnerships. Interests of unaffiliated third parties are reflected
as minority interests.

(b) Pro Forma Balance Sheet

The pro forma balance sheet as of December 31, 1996 reflects the planned
distributions to existing shareholders prior to the anticipated completion of
the Company's intended initial public offering (the "Offering"). Such
distributions, which are estimated to aggregate $2,500,000, relate to the
undistributed S corporation earnings and anticipated tax liabilities
attributable to the Company's operations prior to the completion of the
Offering. No assurance can be given that the Offering will be consummated.

Cash and cash equivalents consist of all highly liquid investments purchased
with an original maturity of three months or less. Cash and cash equivalents
consist of cash and money market funds.

(d) Restricted Cash

Restricted cash consists of (1) deposits received on sales of Vacation
Ownership Interests that are held in escrow until the applicable statutory
rescission period has expired and the related customer mortgage has been
recorded, and (2) workman's compensation funds.

F-7

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

(e) Allowance for Losses on Customer Mortgages Receivable and Repurchase
Obligations

The Company provides for estimated future losses to be incurred related to
uncollectible customer mortgages receivable. The allowance is based on the
collection history of the receivables and is net of anticipated cost
recoveries of the underlying Vacation Ownership Interests. Additionally, the
Company had established liabilities reflecting repurchase obligations which
were assumed as part of: (i) the acquisition by the Company in 1991 related to
prior sales of customer mortgages receivable by the Seller, and (ii) related
to sales with recourse of customer mortgages receivable by the Company, to
limited partnerships in which the Company had a residual interest, pursuant to
agreements entered into during 1991 and 1992 (see Note (2)(i)). Management
believes that all such allowances and estimated liabilities are adequate.

(f) Inventory of Vacation Ownership Interests

Inventory of Vacation Ownership Interests and related construction in
progress are carried at cost, which is lower than net realizable value. The
recoverability of inventory is determined on an individual project basis which
is based on each resort location.

(g) Land Held for Development

Land held for development is carried at the lower of cost or net realizable
value.

(h) Prepaid Expenses and Other Assets

Costs associated with a five-year covenant not-to-compete agreement with a
former shareholder/executive of the Company are included in prepaid expenses
and other assets in the accompanying combined balance sheets. These costs are
being amortized over the terms of the agreement.

Prepaid financing fees related to notes and mortgages payable are
capitalized and amortized over the lives of the respective debt on a straight-
line basis, and are included in depreciation and amortization in the
accompanying combined statements of income.

(i) Investments in Limited Partnerships

Investment in limited partnerships represented the Company's initial
investment in certain limited partnerships, in which it had residual
interests, formed in 1991 and 1992, to which the Company sold customer
mortgages receivable pursuant to a commitment to sell a stipulated amount,
which was fulfilled by early 1994. The Company reflected such investments on
the cost method and recorded its initial investment in limited partnerships as
the difference between the outstanding contractual amount of customer
mortgages receivable sold and the proceeds from such sale. The Company
estimated that its cost was not in excess of net realizable value. During 1995
and 1996 upon repurchasing customer mortgages receivable previously sold
pursuant to "clean-up" call provisions related to such sales, the Company
recorded the difference between the remaining outstanding contractual
receivable amount and the net repurchase amount and the balance of the
investment in the respective limited partnership as a loan discount, to be
amortized over the estimated remaining life of the repurchased receivables.
Therefore, as of December 31, 1996, the Company has no investments in limited
partnerships which have purchased customer mortgages receivable.

(j) Property and Equipment

Property and equipment are recorded at cost. Depreciation of property and
equipment is computed over the applicable estimated useful lives (between 3
and 30 years) of the assets using the straight-line method.

F-8

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

(k) Customer Deposits

Until a Vacation Ownership Interest contract qualifies as a sale, all
payments received are accounted for as deposits. If a contract is canceled
after the applicable statutory period, deposits forfeited are credited to
income.

(l) Revenue Recognition

Substantially all Vacation Ownership Interests sold by the Company generate
installment receivables secured by a mortgage on the related Vacation
Ownership Interest. These customer mortgages receivable are payable in monthly
installments, including interest, with maturities up to ten years. Sales are
included in revenues when minimum down payment requirements have been met. A
provision is recorded for those contracts expected to rescind in the allowed
statutory rescission period.

Product costs and direct selling expenses related to a Vacation Ownership
Interest sale are recorded at the time the sale is recognized. Product costs
include the cost of land, professional fees, improvements to the property and
the costs of amenities constructed for the use and benefit of the Vacation
Ownership Interest owners. Product costs are allocated to each Vacation
Ownership Interest based on the total number of Vacation Ownership Interests
in the particular phase.

Resort revenues are recognized on an accrual basis. Telecommunications
revenues, primarily from contracting services to third parties, are recognized
when earned on a percentage of completion basis.

(m) Excess Value Over Consideration

In connection with the acquisition by the Company in 1991 from the Seller,
the estimated value of the assets acquired exceeded the consideration paid
(including the estimated liabilities assumed as part of the transaction) by
$3,380,621. Accordingly, the excess value over consideration has been
allocated on a pro-rata basis to reduce the recorded value of long-term assets
originally acquired from the Seller, principally customer mortgages
receivable. This excess value over consideration is being amortized into
income over the life of those assets. The amount of excess value over
consideration amortized into income was $364,952, $219,095 and $105,101 in
1994, 1995 and 1996, respectively, with $839,129 remaining unamortized as of
December 31, 1996.

(n) Interest Rate Swap Agreements

The Company only uses derivative financial instruments on a limited basis
and does not use them for trading purposes. Derivative financial instruments
are used to manage well-defined interest rate risks. The differential to be
paid or received under the terms of the interest rate swap agreements is
accrued as interest rates change and is recognized over the life of the
applicable interest rate swap agreements. The Company does not engage in
speculative or profit motivated hedging activities.

(o) Fair Market Value of Financial Instruments

The carrying amount reported in the combined balance sheets for cash and
cash equivalents, restricted cash, other receivables, accounts payable and
accrued liabilities approximates fair market value due to the immediate or
short-term maturity of these financial instruments.

The approximate fair value of customer mortgages receivable exceeds book
value by the amount of the unamortized discount on customer mortgages
receivable purchased.

The carrying amount of notes and mortgages payable approximates fair market
value as the interest rates on the underlying instruments reprice frequently.

F-9

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

The fair market value of the interest rate swaps (used for hedging purposes)
is the estimated amount the Company would pay to terminate the interest rate
swap agreements at December 31, 1996, taking into account the interest rates
and the current credit-worthiness of the interest rate swap counterparty. The
fair market value of the liability for interest rate swaps at December 31,
1996 is $60,295 based upon the estimated unwind cost which would be associated
with terminating the interest rate swap agreements. The interest rate swaps do
not have a carrying value as they did not have an initial cost when acquired.

(p) Income Taxes

The Company and its combined affiliates include entities taxed as S
corporations taxable at the shareholder level or as partnerships taxable at
the partner level. Accordingly, the accompanying combined financial statements
do not include assets or liabilities related to or provision for income taxes
(See Note (16)).

(q) Use of Estimates

Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the combined financial
statements and the reported amounts of revenues and expenses during the
reporting period to prepare these combined financial statements in conformity
with generally accepted accounting principles. Actual results could differ
from those estimates and assumptions.

(r) Effect of New Accounting Pronouncements

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("Statement") No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of " which requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less
than the assets' carrying amount. Statement 121 also addresses the accounting
for long-lived assets that are expected to be disposed of. The Company adopted
Statement 121 in the first quarter of 1996 and there was no material impact on
the Company's operations or financial position upon adoption.

In October 1995, the FASB issued Statement No. 123, "Accounting for Stock-
Based Compensation." The Statement provides that companies must either charge
the value of stock options granted to their income statement or provide pro
forma equivalent information in a footnote disclosure and continue to account
for the value of the stock options in accordance with APB Opinion No. 25. The
Company will adopt this standard in 1997 after completion of the Offering by
accounting for employee stock-based compensation under APB Opinion No. 25 and
providing pro forma equivalent information in a footnote disclosure required
by Statement No. 123.

In June 1996, the FASB issued Statement No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities"
Statement No. 125 provides accounting and reporting standards for transfers
and servicing of financial assets and extinguishments of liabilities. Those
standards are based on consistent application of a financial-components
approach that focuses on control. Under that approach, after a transfer of
financial assets, an entity recognizes the financial and servicing assets it
controls and the liabilities it has incurred, derecognizes financial assets
when control has been surrendered, and derecognizes liabilities when
extinguished. This Statement is effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after December
31, 1996, and is to be applied prospectively. The Company does not anticipate
a material impact on its operations or financial position from the
implementation of Statement No. 125 as it has no current plans to sell
customer mortgages receivable in the foreseeable future.

F-10

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

(s) Reclassifications

Certain prior year amounts have been reclassified to conform with the 1996
presentation.

(3) CUSTOMER MORTGAGES RECEIVABLE, NET

As of December 31, customer mortgages receivable, net consisted of:

1995 1996
----------- ------------

Customer mortgages receivable, gross................ $93,342,562 $115,969,865
Less:
Unamortized discount on customer mortgages
receivable purchased............................. (3,714,702) (5,539,457)
Unamortized excess value over consideration....... (125,233) (74,160)
Allowance for loss on receivables................. (9,008,675) (10,190,592)
----------- ------------
Customer mortgages receivable, net................ $80,493,952 $100,165,656
=========== ============

As of December 31, 1995 and 1996, customer mortgages receivable, gross, from
foreign buyers aggregated approximately $26,400,000 and $28,070,000,
respectively with buyers within no individual foreign country aggregating more
than 5% of gross outstanding customer mortgages receivable.

Stated interest rates on customer mortgages receivable outstanding at
December 31, 1996 range from 00.0% to 18.9% per annum (averaging approximately
14.4% per annum contractually). Interest is not imputed on customer mortgages
receivable with less than a market interest rate because such amounts are
immaterial.

The activity in the customer mortgages receivable allowance for doubtful
accounts is as follows:

1994 1995 1996
----------- ----------- -----------

Balance, beginning of year............. $10,618,538 $10,143,296 $ 9,008,675
Provision for doubtful accounts........ 3,802,905 3,522,316 4,270,887
Allowance relating to customer
mortgages receivable purchased........ -- 628,397 588,276
Customer mortgages receivable charged
off................................... (4,278,147) (5,285,334) (3,677,246)
----------- ----------- -----------
Balance, end of year................... $10,143,296 $ 9,008,675 $10,190,592
=========== =========== ===========

During the first quarter of 1994, pursuant to an agreement entered into
during 1992, the Company completed the sale of $7,723,695 of customer
mortgages receivable for proceeds of $6,557,769, prior to related transaction
expenses. The sale resulted in no gain or loss in the accompanying combined
statements of income. The purchaser was a partnership in which the Company has
a residual minority limited partnership interest. The Company's interest in
the partnership, as well as other such partnerships, to which customer
mortgages receivable were sold during 1991 through 1994, have been reflected
with a carrying value of $5,058,710 as of December 31, 1995.

During 1995 and 1996, under the clean-up call provisions of the related
transactions, the Company repurchased the remaining amount of customer
mortgages receivable previously sold and effectively liquidated the
partnerships. The Company acquired gross customer mortgages receivable of
$10,473,284 and $9,804,274 and recorded a discount which amounted to
$5,776,243 and $4,581,563 for December 31, 1995 and 1996, respectively. This
discount is being amortized over the estimated remaining collection period of
the purchased customer mortgages receivable. Amortization of the discount
during 1995 and 1996 was $2,061,541 and $2,756,905, respectively, and is
included in interest income.

F-11

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

(4) JOINT VENTURES

Vistana WGV, Ltd. ("WGV")

In June of 1996, the Company entered into a partnership agreement wherein
the Company would serve as general partner with operating and financial
control over the partnership as well as own a 37.5% ownership interest
therein. WGV is to develop 408 units near St. Augustine, Florida. WGV has
entered into various licensing, servicing fee and royalty arrangements based
upon stipulated percentages of sales of Vacation Ownership Interests or gross
rental revenue from operations of unoccupied units at the resort. A $5,075,000
licensing fee was paid by WGV to an unaffiliated partner for the use of names
and logos wherein such fee has been capitalized and will be amortized over the
projected sales period currently estimated at nine years. WGV is contingently
liable, along with other developers at the project, for annual debt service
shortfalls, up to a specified amount related to bond funding for a related
convention center development.

Under certain defined circumstances, the Company has the right to acquire
the interest of the other unaffiliated partners as well as such unaffiliated
partners having the right to require the Company to purchase their ownership
interests.

Oak Plantation Joint Venture ("OPJV")

In June of 1996, the Company acquired a 67% ownership interest and became
managing joint venturer for OPJV. OPJV is in the process of converting a 242
unit multi-family property in Kissimmee, Florida into a Vacation Ownership
Interest resort. The Company acquired its ownership interest without payment
of cash in a purchase transaction. The fair value of both the assets acquired
and the liabilities assumed aggregated approximately $12,232,000, which
included a liability of $1,900,000 which was paid in January 1997 to an
unaffiliated partner for the early termination of a consulting service
arrangement. Operations have been included since June of 1996 and are
immaterial to the combined statement of income.

Other and Possible Future Joint Ventures

Prior to December 31, 1996, the Company had investments in limited
partnerships. See Note (2)(i).

Also, the Company and Promus Hotels, Inc. have entered into an exclusive
five-year agreement (the "Promus Agreement") to jointly acquire, develop,
market and operate vacation ownership resorts in North America under Promus'
Embassy Vacation Resort, Hampton Vacation Resort and Homewood Vacation Resort
brands. Under the Promus Agreement, the Company will be Promus' exclusive
joint venture partner for the acquisition, development and operation of
vacation ownership resorts in North America and will also have the option of
operating vacation ownership resorts on a franchise basis. The Promus
Agreement precludes the Company from acquiring or developing vacation
ownership resorts with any other multi-hotel brand, but preserves its ability
to develop vacation ownership resorts in combination with non-hotel brands to
acquire or develop vacation ownership resorts under the Vistana name (other
than in certain selected markets agreed to by the parties), and to develop
vacation ownership resorts with unique, non-multi-hotel brand hotel
properties. Although the Company and Promus are evaluating new resort
development opportunities for the joint venture, no commitments have been made
for a specific development as of December 31, 1996.

F-12

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

In October 1996, the Company signed a letter of intent with PGA of America,
which contemplates a long-term affiliation for the development of future
vacation ownership resorts. The Company anticipates acquiring 25 acres of land
adjacent to an existing 36-hole championship golf facility owned by a
subsidiary of PGA of America in Port St. Lucie, Florida, for the development
of the first PGA Vacation Resort by Vistana. The Company anticipates that it
will commence construction of this resort during 1997 after acquisition of the
land.

No assurances can be given that a definitive agreement with PGA of America
will be consummated or that specific development will occur pursuant to the
Promus Agreement.

(5) PROPERTY AND EQUIPMENT, NET

As of December 31, property and equipment, net consisted of:

1995 1996
----------- -----------

Land and land improvements............................ $ 2,483,353 $ 2,483,353
Buildings and building improvements................... 6,319,497 7,760,444
Furniture, fixtures and equipment..................... 5,265,779 7,234,221
----------- -----------
Subtotal............................................ 14,068,629 17,478,018
Less accumulated depreciation......................... (3,805,521) (5,181,641)
----------- -----------
Subtotal............................................ 10,263,108 12,296,377
Construction in progress.............................. 1,093,806 98,713
----------- -----------
Property and equipment, net........................... $11,356,914 $12,395,090
=========== ===========

(6) PREPAID EXPENSES AND OTHER ASSETS

As of December 31, prepaid expenses and other assets consisted of:

1995 1996
---------- -----------

Prepaid licensing fee................................... $ -- $ 5,075,000
Prepaid financing fees.................................. 2,459,171 2,946,781
Covenant not-to-compete (Note (9))...................... 1,589,257 1,195,857
Other................................................... 872,585 1,888,165
Prepaid expenses........................................ 726,920 975,668
Due from homeowners associations........................ 444,145 451,921
Mortgage interest earned................................ 438,223 438,223
Sales documents, premium and other inventory............ 741,086 1,006,840
Deferred servicing premiums............................. 277,490 --
---------- -----------
Total prepaid expenses and other assets............. $7,548,877 $13,978,455
========== ===========

The covenant-not-to-compete with a former shareholder/executive of the
Company (see Note (9)) is being amortized over the term of the related five-
year agreement. Prepaid financing fees related to notes and mortgages payable
are capitalized and amortized over the lives of the respective debt on a
straight-line basis. Amortization expense related to prepaid financing fees
and the covenant not to compete was $305,764, $655,276 and $685,234 and
$50,000, $253,973 and $393,400, respectively in 1994, 1995 and 1996,
respectively, and are included in amortization and depreciation expense on the
combined statements of income.

F-13

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

(7) REPURCHASE OBLIGATIONS

Changes in repurchase obligations during the years ended December 31 were as
follows:

1994 1995 1996
---------- ---------- ----------

Balances, beginning of year................ $7,744,671 $6,909,822 $3,002,847
Additional obligations for customer
mortgages
receivable sold during the year with
recourse.................................. 771,502 -- --
Loss on customer mortgages receivable
repurchased
under recourse provisions................. (1,606,351) (1,603,419) (1,407,880)
Remaining balance of estimated losses on
repurchase obligations relating to
customer mortgages receivable
repurchased............................... -- (2,303,556) (1,594,967)
---------- ---------- ----------
Balances, end of year...................... $6,909,822 $3,002,847 $ --
========== ========== ==========

As of December 31, 1996, there were no outstanding customer mortgages
receivable for which the Company had a recourse obligation.

(8) NOTES AND MORTGAGES PAYABLE

As of December 31, notes and mortgages payable consisted of:

1995 1996
----------- -----------

Notes payable and mortgage obligations to lender, cross
collateralized, which bear interest at prime plus 2%
(10.25% per annum at December 31, 1996):
Note payable secured by customer mortgages receivable.
Remaining availability under this line of credit is
$19,182,426 at December 31, 1996. The remaining
commitment term for new borrowings expires in August
1998. The note matures 84 months after the expiration
of the last borrowing during the commitment term..... $42,046,126 $62,099,374
Note payable requiring quarterly payments of principal
which matures on May 26, 2000........................ 3,600,000 2,800,000
Mortgage obligation secured by land and building with
anticipated final payment in July 1997............... 2,087,300 918,200
Mortgage obligation secured by land and office
building due May 8, 2004............................. 4,705,163 4,317,615
Notes payable to bank:
Note payable bearing interest at a variable rate
(applicable Eurodollar rate plus 4%, which has been
swapped) payable quarterly. The note requires
quarterly payments of principal and matures on June
30, 2000............................................. 12,600,000 9,800,000
Note payable bearing interest at a variable rate
(applicable Eurodollar rate plus 6%, which has been
swapped) payable quarterly. The note requires
quarterly payments of principal and matures on
December 29, 2000.................................... 6,500,410 4,695,301
Note payable to lender bearing interest at 11.37% per
annum, secured by customer mortgages receivable.
Lender receives all principal and interest collected
from customer mortgages receivable securing the note.
Final payment is expected by December 1998........... 15,903,003 8,752,094

F-14

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

1995 1996
------------ ------------

Note payable to lender bearing interest at 10.68%
per annum, secured by customer mortgages
receivable. Lender receives all principal and
interest collected from customer mortgages
receivable securing the note. Final payment is
expected by December 1997......................... 5,462,111 1,120,152
Subordinated unsecured note payable to lender
bearing interest at prime plus 2% (10.25% per
annum at December 31, 1996) payable semi-annually.
The note requires one balloon payment of principal
on May 26, 21001.................................. 4,500,000 4,500,000
Note payable to bank bearing interest at prime plus
1.5% (9.75% per annum at December 31, 1996)
secured by customer mortgages receivable.
Remaining availability under this revolving line
of credit is $3,724,213 at December 31, 1996 and
the remaining commitment term for new borrowings
expires in June 1998.............................. 2,505,078 1,275,787
Mortgage obligation, secured by land and store
building, bearing interest at 8.35% per annum due
December 5, 1997.................................. 786,059 656,666
Mortgage loan with an available line of $1,100,000
secured by land and improvements (including the
constructed premises). The loan bears interest at
prime plus 1% (9.25% per annum at December 31,
1996) and principal amortizes over a ten year term
through December 2005............................. 610,547 984,863
Various notes payable with monthly payments of
principal and interest, ranging from 8.25% to
11.03% per annum. Final payments are due through
March 1999. The notes are collateralized by
transportation and telecommunications equipment... 197,842 107,492
Notes payable and mortgage obligations to lender
which bear interest at prime plus 2% (10.25% per
annum at December 31, 1996) plus incentive fees:
Term note payable under which a total $18,275,000
may be borrowed requiring monthly interest
payments, and maturing on June 25, 2001. Secured
by real property and construction in progress..... -- 12,700,607
Unsecured note payable under a $2,500,000 working
capital loan agreement requiring monthly interest
payments and maturing on June 25, 2001............ -- 943,120
Acquisition note payable under which a total of
$3,000,000 may be borrowed requiring monthly
interest payments and maturing on July 24, 2001.
Secured by real and personal property............. -- 385,338
Construction mortgage note payable under which a
total of $15,600,000 may be borrowed requiring
monthly interest payments, and maturing on July
24, 2001. Secured by real property and
construction in progress.......................... -- 2,500,000
------------ ------------
Total notes and mortgages payable................ $101,503,639 $118,556,609
============ ============

In addition, the Company has available loan facilities under which it may
borrow up to $25,000,000 bearing interest at prime plus 2% which will be
secured by customer mortgages receivable. Also, the Company has available loan
facilities in the amount of $1,726,500 at rates from 9.5% to 10.25% per annum.

As part of financing the development of units for WGV and OPJV, the joint
venturers have agreed to pay its lenders, upon fulfillment of its obligations,
incentive fees. The incentive fees will be recognized over the term of the

F-15

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

debt as an adjustment to interest expense using the effective interest method.
The debt associated with the incentive fees have outstanding balances of
$12,700,607, $943,120, $385,338 and $2,500,000 at December 31, 1996.

In addition, upon formation, WGV entered into an agreement with one of the
limited partners whereby WGV could borrow up to $1,620,000. No amounts were
outstanding under this agreement as of December 31, 1996.

Scheduled principal payments on the notes and mortgages payable where there
are agreed upon scheduled principal repayments subsequent to December 31,
1995, are as follows:

YEAR ENDED DECEMBER 31:
-----------------------

1997........................................................... 6,954,927
1998........................................................... 6,095,021
1999........................................................... 5,405,712
2000........................................................... 2,446,940
2001........................................................... 5,109,666
Thereafter..................................................... 1,760,758
-----------
$27,773,024
===========

Repayment terms on the notes payable secured by customer mortgages
receivable are such that all collections on the receivables serving as
collateral are paid to the lender on a monthly basis, and are excluded from
the above. Payments are first applied to outstanding interest and then to
principal. As principal repayments on notes payable are made by collections of
the related secured customer mortgages receivable, there are no fixed
amortization dates for these notes. Total amount of pledged customer mortgages
receivable was $75,817,507 and $86,874,266 at December 31, 1995 and 1996,
respectively.

(9) EQUITY REDEMPTIONS

During 1995, the Company made distributions to one of its shareholders
sufficient to redeem all of that individual's interests in the Company. As
part of this transaction, the former shareholder/executive and the Company
entered into a five-year covenant-not-to-compete and a consulting and
management agreement. Costs associated with the five-year covenant-not-to-
compete have been included in prepaid expenses and other assets in the
accompanying combined balance sheets (see Note (6)) and are being amortized
over the life of the five-year agreement.

In connection with the sale of customer mortgages receivable concurrent with
the acquisition by the Company in 1991 (see Note 3), unaffiliated third
parties received options to purchase limited partnership interests totaling
15% of certain of the combined affiliates of the Company. During 1995, the
Company repurchased these options from the unaffiliated third parties.

These two transactions have been reflected as equity redemptions in the
amount of $20,167,055 in the accompanying combined statements of equity for
the year ended December 31, 1995.

(10) EMPLOYMENT AGREEMENTS

In 1992, the Company entered into employment agreements (which were amended
and expanded in 1995) with certain senior management executives who were not
owners of the Company. In order to receive payment under the agreements the
executives were required to remain in the employ of the Company through
December 31, 1996. The agreements, provided that these executives would be
entitled to receive, on a deferred basis, an aggregate of 3% (amended in 1995
to 10%) of the cumulative pretax income of the Company during the period of
employment, before determination of the deferred executive incentive
compensation amounts.

F-16

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

The total expense associated with these deferred executive incentive
compensation agreements was $332,078, $3,447,945 and $1,113,829 for the years
ended December 31, 1994, 1995 and 1996, respectively. Amounts payable under
these agreements totaled $4,186,539 and $4,919,932 as of December 31, 1995 and
1996, respectively, and are included in accrued compensation and benefits in
the accompanying combined balance sheets. Payment of this obligation will be
made in equal installments over a three year period beginning at the earlier
of June 15, 1997 or completion of the Offering.

(11) 401(K) PLAN

(12) STOCK PLANS

The Vistana, Inc. stock plan was initially adopted by the Company's
shareholders in December 1996 and provides for the granting of stock options
to key employees, directors and officers of, and consultants to the Company at
a price equal to the fair market value of the shares (or 110% of fair market
value if the options are granted to a greater than 10% shareholder of the
Company) at the date of the grant and are for terms not exceeding ten years
(or five years if the options are granted to a greater than 10% shareholder of
the Company). There are 1,900,000 shares of common stock authorized for
issuance under the plan. Such options shall vest monthly in arrears over a
period of 48 months from the grant or award date. The plan also allows for
grants of restricted stock, stock appreciation rights (SARs") and phantom
stock awards.

Each initial director of the Company who is an eligible director will
automatically be granted options to purchase 45,000 shares of Common Stock for
an exercise price per share equal to the price to the public in the Offering.
These options will be exercisable in 15,000 share increments each of the
following times: (i) immediately upon grant, (ii) immediately following the
date of the 1998 annual shareholders' meeting, and (iii) immediately following
the date of the 1999 annual shareholders' meeting. In addition, the plan
grants each eligible director immediately exercisable options to purchase
5,000 shares of Common Stock at the date immediately following each annual
shareholders' meeting. These options will expire ten years from the date of
grant.

In December 1996, the Company granted certain executive officers and other
employees options to purchase an aggregate of 535,000 shares of Common Stock
at an exercise price of $11 per share. Concurrently with the completion of the
Offering, the Board of Directors may grant to several employees options to
purchase additional shares of Common Stock under the stock plan at an exercise
price equal to the price to the public in the Offering.

Effective upon completion of the Offering, certain of the Existing
Shareholders will grant to certain executive officers and other employees of
the Company options to acquire an aggregate of 1,350,000 shares of Common
Stock at an exercise price equal to the price to the public in the Offering.
These options will be exercisable in full at the date of grant and will
terminate ten years after the date of grant in the Offering.

F-17

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

(13) COMMITMENTS AND CONTINGENCIES

The Company is, from time to time, party to certain litigation which relates
to matters arising in the ordinary course of business. Management believes
that any of such litigation is not expected to have a material impact on the
financial position or results of operations of the Company.

(14) INTEREST RATE SWAP AGREEMENTS

The Company entered into interest rate swap agreements to reduce the impact
of changes in interest rates on certain of its floating rate term debt. At
December 31, 1996, the Company had two outstanding interest rate swap
agreements with a commercial bank, having a total notional principal amount of
$14,495,301. These interest rate swap agreements effectively fix the Company's
interest rates on its $9,800,000 floating rate note due June 30, 2000 and on
its $4,695,301 floating rate note due December 29, 2000, to 9.69% per annum
and 11.69% per annum, respectively.

The interest rate swap agreements mature at the time the related notes
mature. The Company is exposed to credit loss in the event of nonperformance
by the other parties to the interest rate swap agreements. However, the
Company believes the risk of incurring losses related to credit risk is remote
and any losses would be immaterial. As of December 31, 1996, the Company had
no risk of loss as it related to the counterparty as it would have cost the
Company approximately $60,295 to terminate the agreements at that date.

(15) SUPPLEMENTAL DISCLOSURES OF NON-CASH OPERATING AND INVESTING ACTIVITIES

1994 1995 1996
---------- ----------- -----------

Supplemental schedule of non-cash operating
activities:
Transfers from construction in progress to
inventory of vacation ownership
interests................................ $4,836,553 $12,554,304 $ 9,397,063
========== =========== ===========
Transfers from land held for development
to inventory of vacation ownership
interests................................ $ 480,000 $ 1,330,808 $ 986,018
========== =========== ===========
Supplemental schedule on non-cash investing
activities:
Increases to investments in limited
partnerships attributed to customer
mortgages receivable sold in excess of
proceeds received........................ $1,157,253 $ -- $ --
========== =========== ===========

F-18

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

During 1995 and 1996 the Company purchased customer mortgages receivable
previously sold pursuant to clean-up call provisions relating to such sales. A
summary of the impact of these transactions on noncash investing activities is
as follows:

1995 1996
----------- ----------

Contractual balance of customer mortgages receivable
acquired............................................. $10,473,284 $9,804,274
Allowance for doubtful accounts assigned to customer
mortgages receivable acquired........................ (628,397) (588,276)
Remaining balance of estimated losses on repurchase
obligations relating to customer mortgages receivable
repurchased.......................................... 2,303,556 1,594,967
Investment in limited partnership..................... (4,680,117) (5,058,711)
Cash paid upon repurchase............................. (1,692,083) (1,170,691)
----------- ----------
Discount on purchase of customer mortgages
receivable........................................... $ 5,776,243 $4,581,563
=========== ==========

(16) PRO FORMA DISCLOSURES (UNAUDITED)

Upon completion of the Offering, the Company will be subject to federal and
state income taxes from the effective date of the sale of the Common Stock. In
addition, the Company will be required to provide a deferred tax liability for
cumulative temporary differences between financial reporting and tax reporting
by recording a provision for such deferred taxes in its combined statements of
income for the period following the effective date of the Offering. Such
deferred taxes will be based on the cumulative temporary differences at the
date of the Offering.

Upon effectiveness of the Offering, the Company will become subject to
federal and state income taxes. Pursuant to SFAS No. 109, "Accounting for
Income Taxes", the Company will record income tax expense and a net deferred
tax liability for the effect of cumulative temporary differences as of the
date of the Formation Transaction. Such amount would have aggregated
$10,770,000 as of December 31, 1996.

The unaudited pro forma provision for income taxes represents the estimated
income taxes that would have been reported had the Company filed federal and
state income tax returns as a regular corporation. The following summarizes
the unaudited pro forma provision for income taxes:

YEAR ENDED DECEMBER 31,
----------------------------------
1994 1995 1996
---------- ----------- ----------

Current:
Federal.................................. $1,500,000 $(1,200,000) $2,500,000
State.................................... 200,000 -- 220,000
---------- ----------- ----------
1,700,000 (1,200,000) 2,720,000
---------- ----------- ----------
Deferred:
Federal.................................. 1,971,000 2,957,000 768,000
State.................................... 313,000 369,000 235,000
---------- ----------- ----------
2,284,000 3,326,000 1,003,000
---------- ----------- ----------
Unaudited pro forma provision for income
taxes..................................... $3,984,000 $ 2,126,000 $3,723,000
========== =========== ==========

F-19

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

A reconciliation between the unaudited pro forma statutory provision for
income taxes (at 34%) and the unaudited pro forma provision for income taxes
is shown as follows for the year ended December 31:

1994 1995 1996
---------- ---------- ----------

Income tax at federal statutory rate...... $3,642,953 $1,989,098 $3,601,953
State tax, net of federal benefit......... 338,580 243,540 300,300
Amortization of excess value recognized... (124,000) (74,500) (35,730)
Other..................................... 126,467 (32,138) (143,523)
---------- ---------- ----------
Unaudited pro forma provision for income
taxes.................................... $3,984,000 $2,126,000 $3,723,000
========== ========== ==========

Deferred income taxes reflect the net tax affects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The significant
components of the pro forma net deferred tax liabilities were as follows for
the year ended December 31:

1995 1996
----------- ------------

Deferred tax assets:
Vacation Ownership Interests....................... $ 9,739,355 $ 10,699,000
Period costs and excess servicing premium.......... 1,759,622 1,499,000
Net operating loss carryforward.................... 126,750 --
Accrued compensation and benefits.................. 1,714,000 2,373,000
Other.............................................. 139,000 79,000
Basis adjustment for tax purposes relating to
redemption of equity interests.................... 2,778,000 2,644,000
----------- ------------
Total deferred tax assets........................ $16,256,727 $ 17,294,000
=========== ============
Deferred tax liabilities:
Deferred revenue (installment sales)............... $24,627,000 $ 26,885,000
Purchase accounting book/tax difference............ 922,000 922,000
Fixed assets....................................... 49,000 --
Vacation Ownership Interest and other inventory.... 327,000 257,000
Other.............................................. 98,727 --
----------- ------------
Total deferred tax liabilities................... 26,023,727 28,064,000
----------- ------------
Pro forma net deferred tax liabilities........... $(9,767,000) $(10,770,000)
=========== ============

The deferred tax benefit associated with the equity redemption deferred tax
asset in 1995 is an offset to the distributions made for that purpose rather
than as an element of the pro forma deferred tax provision for 1995.

Pro forma weighted average number of shares of Common Stock outstanding as
shown on the accompanying combined statement of income for the year ended
December 31, 1996, is based upon the number of shares to be owned by current
shareholders based upon the completion of the Formation Transactions (see Note
(2)(a)) prior to the Offering.

F-20

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
No dealer, salesperson or any other person has been authorized to give any in-
formation or to make any representations other than those contained in this
Prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or by any of the Under-
writers. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any security other than the registered securities to which
this Prospectus relates or any offer to any person in any jurisdiction where
such an offer would be unlawful. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create any implication
that the information herein is correct as of any time subsequent to the date
hereof.

----------------------

TABLE OF CONTENTS

----------------------

Page
----

Prospectus Summary....................................................... 3
Risk Factors............................................................. 12
Use of Proceeds.......................................................... 22
Dividend Policy.......................................................... 22
Capitalization........................................................... 23
Prior Income Tax Status and Planned Distributions........................ 24
Dilution................................................................. 25
Selected Combined Historical Financial Information....................... 26
Pro Forma Combined Financial Information................................. 28
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 30
Business................................................................. 37
Management............................................................... 54
Certain Relationships and Related Transactions........................... 64
Principal and Selling Shareholders....................................... 65
Description of Capital Stock............................................. 67
Shares Eligible for Future Sale.......................................... 68
Underwriting............................................................. 70
Legal Matters............................................................ 71
Experts.................................................................. 72
Additional Information................................................... 72
Index to Financial Statements............................................ F-1

Until , 1997 (25 days after commencement of the Offering), all dealers ef-
fecting transactions in the registered securities, whether or not participating
in this distribution, may be required to deliver a Prospectus. This is in addi-
tion to the obligation of dealers to deliver a Prospectus when acting as under-
writers and with respect to their unsold allotment or subscriptions.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

5,550,000 SHARES

LOGO

COMMON STOCK

------------------

PROSPECTUS

------------------

MONTGOMERY SECURITIES
SMITH BARNEY INC.

, 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the estimated costs and expenses, other than
underwriting discounts and commissions, in connection with the sale and
distribution of the shares of Common Stock being registered hereby, all of
which will be paid by Vistana, Inc. (the "Company").

SEC Registration Fee.......................................... $ 27,077
NASD filing fee............................................... 9,436
Nasdaq National Market listing fee............................ 33,456
Accounting fees and expenses.................................. 225,000
Legal fees and expenses....................................... 650,000
Printing and engraving expenses............................... 250,000
Transfer agent and registrar fees............................. 25,000
Advisory fee to Synagen Capital Partners, Inc. ............... 280,000
Miscellaneous expenses........................................ 650,031
----------
TOTAL..................................................... $2,150,000
==========

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under Florida law, a corporation may indemnify any person who was or is a
party or is threatened to be made a party to an action (other than an action
by or in the right of the corporation) by reason of such person's service as a
director of officer of the corporation, or such person's service, at the
corporation's request, as a director, officer, employee or agent of another
corporation or other enterprise, against expenses (including attorneys' fees)
that are actually and reasonably incurred by such person ("Expenses"), and
judgments, fines and amounts paid in settlement that are actually and
reasonably incurred by such person, in connection with the defense or
settlement of such action; provided that such person acted in good faith and
in a manner such person reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that such person's conduct was
unlawful. Although Florida law permits a corporation to indemnify any person
referred to above against Expenses in connection with the defense or
settlement of an action by or in the right of the corporation, provided that
such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the corporation's best interests, if such
person has been judged liable to the corporation, indemnification is only
permitted to the extent that the adjudicating court (or the court in which the
action was brought) determines that, despite the adjudication of liability,
such person is entitled to indemnity for such Expenses as the court deems
proper. The determination as to whether a person seeking indemnification has
met the required standard of conduct is to be made (i) by a majority vote of a
quorum of disinterested members of the board of directors, or (ii) by
independent legal counsel in a written opinion, if such a quorum does not
exist or if the disinterested directors so direct, or (iii) by the
shareholders. The Florida Business Corporation Act also provides for mandatory
indemnification of any director, officer, employee or agent against Expenses
to the extent such person has been successful in any proceeding covered by the
statute. In addition, the Florida Business Corporation Act provides for the
general authorization of advancement of a director's or officer's litigation
expenses in lieu of requiring the authorization of such advancement by the
board of directors in specific cases, and that indemnification and advancement
of expenses provided by the statute shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may
be entitled under any by-law, agreement or otherwise.

The Company's Articles of Incorporation and By-Laws provide that the Company
shall indemnify its directors, officers, employees and other agents to the
fullest extent permitted by Florida law.

II-1

The Company has also entered into agreements to indemnify its directors and
certain of its officers, in addition to the indemnification provided for in
the Company's Articles of Incorporation and By-Laws. These agreements provide,
among other things, that the Company will indemnify its directors and officers
for all direct and indirect expenses and costs (including, without limitation,
all reasonable attorneys' fees and related disbursements, other out-of-pocket
costs and reasonable compensation for time spent by such persons for which
they are not otherwise compensated by the Company or any third person) and
liabilities of any type whatsoever (including, but not limited to, judgments,
fines and settlement fees) actually and reasonably incurred by such person in
connection with either the investigation, defense, settlement or appeal of any
threatened, pending, or completed action, suit or other proceeding, including
the corporation, arising out of such person's services as a director, employee
or other agent of the Company, any subsidiary of the Company or any other
company or enterprise to which the person provides services at the request of
the Company. The Company believes that these provisions and agreements are
necessary to attract and retain talented and experienced directors and
officers.

The Company will maintain liability insurance for the benefit of its
directors and officers.

Under the terms of the Underwriting Agreement, the Underwriters have agreed
to indemnify, under certain conditions, the Company, its directors, certain of
its officers and persons who control the Company within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), against certain
liabilities. The Company and the Selling Shareholders have also agreed to
indemnify the Underwriters against certain liabilities which may be incurred
in connection with the Offering made by this Prospectus forming a part of the
Registration Statement, including liability under the Securities Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

On December 27, 1996, the Company sold ten shares of Common Stock to each of
Raymond L. Gellein, Jr. and Jeffrey A. Adler for a price of $11 per share, or
an aggregate price of $220. These transactions were effected in reliance upon
the exemption contained in Section 4(2) of the Securities Act and/or
Regulation D promulgated thereunder.

In connection with the Formation Transactions, in December 1996, the
Existing Shareholders agreed to contribute to the Company all of their
respective interests in each of the Affiliated Companies and the Related
Partnerships in consideration for the Company's issuance of 14,174,980 shares
of the Company's Common Stock, $.01 par value. Such securities will be issued
by the Company concurrently with the completion of the Offering in reliance
upon an exemption from the registration requirements of the Securities Act
provided by Section 4(2) thereof.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS

A list of exhibits filed with this Registration Statement on Form S-1 is set
forth in the Index to Exhibits on page E-1, and is incorporated herein by
reference.

(B) FINANCIAL STATEMENT SCHEDULES

See Financial Statement Schedule filed as Exhibit 27.1 to this Registration
Statement.

ITEM 17. UNDERTAKINGS

(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrants of
expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or

II-2

proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrants will, unless
in the opinion of their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by them is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.

(b) The registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-3

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
VISTANA, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ORLANDO,
STATE OF FLORIDA, ON FEBRUARY 10, 1997.

Vistana, Inc.

/s/ Raymond L. Gellein, Jr.
By: _________________________________
Name: Raymond L. Gellein, Jr.
Title: Chairman of the Board and
Co-Chief Executive Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW ON FEBRUARY 10, 1997, BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED:

SIGNATURE TITLE

/s/ Raymond L. Gellein, Jr. Chairman of the Board, Co-Chief
- ------------------------------------- Executive Officer and Director
RAYMOND L. GELLEIN, JR. (Principal Executive Officer)

/s/ Matthew E. Avril Executive Vice President and Chief
- ------------------------------------- Operating Officer (Principal
MATTHEW E. AVRIL Financial Officer and Principal
Accounting Officer)

/s/ Jeffrey A. Adler President and Co-Chief Executive
- ------------------------------------- Officer and Director
JEFFREY A. ADLER

II-4