AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 17, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
VISTANA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
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 PRINCIPAL 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:
ROSS D. EMMERMAN, ESQ. PETER T. HEALY, ESQ.
WILLIAM M. HOLZMAN, ESQ. O'MELVENY & MYERS LLP
NEAL, GERBER & EISENBERG 275 BATTERY STREET
TWO NORTH LASALLE STREET EMBARCADERO CENTER WEST
SUITE 2200 26TH FLOOR
CHICAGO, ILLINOIS 60602 SAN FRANCISCO, CALIFORNIA 94111
(312) 269-8000 (415) 984-8833
----------------

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 THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(D)
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. [_]
----------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PROPOSED
MAXIMUM
AGGREGATE
TITLE OF EACH CLASS OF OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1)(2) REGISTRATION FEE(2)
- ----------------------------------------------------------------------------------------------

Common Stock, par value $0.01 per share............. $121,900,000 $36,940

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Includes 600,000 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 (c), on the basis of the average of the high and low
prices of the Common Stock as reported on the Nasdaq National Market on
September 15, 1997.
----------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus: one to be used
in connection with an offering in the United States and Canada (the "U.S.
Prospectus") and one to be used in a concurrent offering outside the United
States and Canada (the "International Prospectus"). The two prospectuses are
identical in all respects except for the front and back cover pages and
"Underwriting." Final forms of each prospectus will be filed with the
Securities and Exchange Commission under Rule 424(b).

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS
SUBJECT TO COMPLETION, DATED OCTOBER 17, 1997

4,000,000 SHARES

LOGO

COMMON STOCK

-----------

All of the 4,000,000 shares of common stock, par value $0.01 per share
("Common Stock"), of Vistana, Inc. (the "Company") offered hereby, are being
sold by the Company. Of the 4,000,000 shares of Common Stock offered hereby,
3,200,000 shares are being offered in a concurrent offering in the United
States and Canada by the U.S. Underwriters (the "U.S. Offering" and, together
with the International Offering, the "Offering"). The price to public and
underwriting discount per share are identical for the International Offering
and the U.S. Offering. The Common Stock is listed for quotation on the Nasdaq
National Market under the symbol "VSTN." On October 15, 1997, the last reported
sale price of the Common Stock was $26 1/8 per share. See "Price Range of
Common Stock."

SEE "RISK FACTORS" COMMENCING ON PAGE 13 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.

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

UNDERWRITING
PRICE TO DISCOUNTS PROCEEDS TO
PUBLIC AND COMMISSIONS(1) COMPANY(2)
- ---------------------------------------------------------------------------

Per Share........................ $ $ $
Total(3)......................... $ $ $
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------

(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.
(2) Before deducting expenses payable by the Company estimated at $600,000.
(3) The Company has granted the several International Managers and U.S.
Underwriters (the "Underwriters") options to purchase up to 120,000 and
480,000 additional shares, respectively, of Common Stock to cover over-
allotments, if any. See "Underwriting." If such options are exercised in
full, the total Price to Public, Underwriting Discount and Proceeds to
Company will be $ , $ and $ , respectively.

-----------

The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, subject to the
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the shares of Common Stock will be made in New York, New York, on
or about November , 1997.

-----------

MERRILL LYNCH & CO. NATIONSBANC MONTGOMERY SECURITIES, INC.
LEHMAN BROTHERS
SMITH BARNEY INC.

-----------

The date of this Prospectus is November , 1997

[NARRATIVE DESCRIPTION OF GRAPHICS--EDGAR ONLY--TO BE FILED BY AMENDMENT]

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF COMMON STOCK TO
COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

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; and (iii) 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., its consolidated
subsidiaries, its corporate and partnership predecessors, partnerships in which
the Company owns a controlling interest and Success and Points (as defined
herein). 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 high
quality 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 to its customers for their purchase of Vacation Ownership
Interests at the Company's vacation ownership resorts. The Company's pro forma
total revenues for the year ended December 31, 1996 and the six months ended
June 30, 1997 were approximately $113 million and $74 million, respectively.
See "--Summary Combined Historical and Pro Forma Financial Information of the
Company."

The Company currently operates and sells Vacation Ownership Interests at six
vacation ownership resorts. Three of these resorts are in Florida (Vistana
Resort in Orlando, Hampton Vacation Resort--Oak Plantation in Kissimmee, and
Vistana's Beach Club on Hutchinson Island), two in Colorado (Eagle Point in
Vail and Falcon Point in Avon) and one in Arizona (Villas of Cave Creek located
north of Scottsdale). These existing resorts represented a combined total of
1,571 existing units (85,476 Vacation Ownership Interests) as of June 30, 1997.
The Company has three additional resorts under development. These resorts
(Embassy Vacation Resort--Myrtle Beach in South Carolina with 44 units under
construction and pre-construction sales underway, Vistana Resort at World Golf
Village near St. Augustine, Florida with 102 units under construction, and PGA
Vacation Resort by Vistana in Port St. Lucie, Florida with construction of 40
units to commence in early 1998) are anticipated to add approximately 186 units
(9,486 Vacation Ownership Interests) to the Company's selling capacity during
1998. In addition, the Company acts as exclusive sales and marketing agent for
a large vacation ownership resort in Colorado and plans to begin construction,
and commence sales, of a second Arizona resort during 1998 on land under
contract in Scottsdale.

Ownership Interests sold. Raymond L. Gellein, Jr., the Company's Chairman and
Co-Chief Executive Officer, and Jeffrey A. Adler, its President and Co-Chief
Executive Officer, have been employed by the Company since 1980 and 1983,
respectively. Additionally, Messrs. Gellein and Adler serve as the chairman of
the Florida chapter of ARDA and as a director of ARDA, respectively. Under
their direction, the Company has fostered a values-driven business culture that
emphasizes excellence and quality relationships with its employees, customers
and business partners.

The quality and customer appeal of the Company's vacation ownership resorts
have been recognized through industry awards and by several leading travel
publications. At June 30, 1997, the Company's flagship resort, Vistana Resort
in Orlando, contained 1,116 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 existing Florida-
based resorts is rated as a Gold Crown resort by Resort Condominiums
International ("RCI"), and the Villas of Cave Creek and Falcon Point are rated
as Five Star Resorts by Interval International ("II"). Two of the Company's
resorts under development, Vistana Resort at World Golf Village and the Embassy
Vacation Resort--Myrtle Beach, have already achieved the Gold Crown designation
from RCI. In 1996, approximately 13% of the resorts reviewed by RCI received a
Gold Crown rating, the highest rating awarded by RCI, and approximately 18% of
the resorts reviewed by II received a Five Star rating, the highest rating
awarded by II.

As part of its operating strategy, the Company seeks to develop strategic
relationships with selected parties in order to broaden and enhance its
marketing and sales efforts and to provide additional vacation ownership resort
development opportunities. In furtherance of this strategy, as described below,
the Company has entered into (i) an exclusive joint venture agreement with
Promus Hotels, Inc. ("Promus"), a leading hotel company in the United States;
(ii) a long-term affiliation agreement with a subsidiary of The Professional
Golfers' Association of America ("PGA of America"); and (iii) a limited
partnership which has the exclusive right to develop and market Vacation
Ownership Interests at World Golf Village. The Company intends to continue to
develop and expand strategic alliances that will create opportunities to
develop unique, high quality vacation ownership resorts and broaden and enhance
its marketing and sales efforts.

GROWTH STRATEGY

The Company's goal is to expand its position as a leading developer and
operator of vacation ownership resorts by (i) continuing sales at the Company's
existing resorts; (ii) developing and selling additional resorts; (iii)
improving operating margins; and (iv) pursuing selected acquisition
opportunities. To achieve this goal, the Company intends to adhere to its core
operating strategies of obtaining extensive access to qualified buyers,
promoting sales and marketing excellence and delivering memorable vacation
experiences to its owners and guests.

Continuing Sales at the Company's Existing Resorts. The Company sold 4,910
Vacation Ownership Interests during the six months ended June 30, 1997 at
existing resort properties, generating $51.5 million in Vacation Ownership
Interest sales, on a pro forma basis. The Company intends to continue to market
its existing inventory of Vacation Ownership Interests and to make available
for sale, based on consumer demand, additional Vacation Ownership Interests
through expansion of certain of the Company's existing vacation ownership
resorts. At June 30, 1997, the inventory of Vacation Ownership Interests at
existing resorts was 14,733.

The Company intends to maintain its position as a leader in the Orlando
vacation ownership market (a popular vacation destination with over 36 million
visitors annually) by developing and selling an additional 423 units at Vistana
Resort, representing an additional 21,573 Vacation Ownership Interests. In
addition, the Company plans to continue sales at the Hampton Vacation Resort--
Oak Plantation, a 242-unit former apartment complex located in the Orlando
market, which the Company is converting in phases into a vacation ownership
resort. This property is owned by a partnership in which the Company holds an
approximately 67% controlling ownership interest. As of June 30, 1997, the
Hampton Vacation Resort--Oak Plantation had an unsold inventory of
approximately 11,735 Vacation Ownership Interests.

The Company added its resorts in Arizona and Colorado in September 1997 as a
result of the acquisition of Success and Points. It plans to continue sales of
existing inventory at these resorts and to expand them where possible. At the
Company's 58-unit Falcon Point Resort, located in Avon, Colorado, 409 Vacation
Ownership Interests remained for sale at June 30, 1997, with an additional 24
units (representing 1,224 Vacation Ownership Interests) planned for future
development. At the Company's 54-unit Eagle Point Resort, located in Vail,
Colorado, 54 Vacation Ownership Interests remained available for sale at June
30, 1997. At the Company's 25-unit Villas of Cave Creek Resort, 849 Vacation
Ownership Interests remained available for sale at June 30, 1997 with another
10 units (representing 510 Vacation Ownership Interests) planned for future
development.

Developing and Selling Additional Resorts. The Company intends to rely on its
operating knowledge and strategic alliances to develop additional vacation
ownership resorts, including the following projects currently in development:

. Vistana Resort at World Golf Village. In the fall of 1996, the Company
commenced construction of the 102-unit first phase (representing 5,202
Vacation Ownership Interests) of a 408-unit vacation ownership resort at
World Golf Village. The first phase is expected to be completed in the
second quarter of 1998. 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, championship golf courses, 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 right 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.

. Embassy Vacation Resort--Myrtle Beach. In December 1996, the Company
acquired an initial 14 acres of unimproved land in Myrtle Beach, South
Carolina for the development of the Embassy Vacation Resort--Myrtle
Beach. The Company also has an option until December 31, 2003 to acquire
up to 26 additional acres of contiguous property for phased expansion of
this resort. The Company commenced construction of the 44-unit first
phase of this resort (representing 2,244 annual Vacation Ownership
Interests) during the third quarter of 1997 and began pre-sales in May
1997. The first phase is expected to be completed in the first quarter of
1998. The Company believes Myrtle Beach represents an attractive, growing
market for the expansion of its portfolio of vacation ownership resorts.
Similar to Orlando, Myrtle Beach has a large number of visitors whose
length of stay averages approximately five days. Consistent with its key
operating strategies, the Company has procured substantial marketing
affiliations with significant tourist venues in the Myrtle Beach area.

. PGA Vacation Resort by Vistana. The Company is the exclusive vacation
ownership resort development company of the PGA of America. In September
1997, the Company acquired 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. The property, located approximately 40 miles
north of Palm Beach Gardens, Florida, is planned to contain approximately
387 units (representing a total of 19,737 Vacation Ownership Interests).
The first phase is expected to be completed during the fourth quarter of
1998. The Company believes that PGA of America, through its approximately
20,000 affiliated golf professionals and the Company's

license to use the PGA of America name, initials, trademark and logo, will
provide strategic marketing opportunities for the Port St. Lucie vacation
ownership resort and any future PGA Vacation Resorts developed by the
Company. See "Business--Affiliation with PGA of America."

. Embassy Vacation Resort--Scottsdale. The Embassy Vacation Resort--
Scottsdale will consist of an estimated 150 units, representing 7,650
Vacation Ownership Interests, and will be constructed by the Company on
approximately 10 acres of land which the Company intends to acquire prior
to December 1997 pursuant to an existing contract entered into by Success
and Points. The Company anticipates that it will commence construction of
the 150 units (representing 7,650 annual Vacation Ownership Interests)
during the first half of 1998. The Scottsdale property will be operated
as an Embassy Vacation Resort franchise pursuant to the Promus Agreement.

. Promus Relationship. In December 1996, the Company and Promus entered
into an exclusive five-year agreement (the "Promus Agreement") to jointly
acquire, develop, market and operate vacation ownership resorts in North
America. The Company believes it will benefit from Promus' strong brand
recognition, large customer base, marketing capabilities and hospitality
management expertise. Promus has agreed that the Company will be the sole
franchisee in North America of the Hampton Vacation Resort and the
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.
The Company currently operates the Hampton Vacation Resort--Oak
Plantation, is developing the Embassy Vacation Resort--Myrtle Beach and
intends to develop a vacation ownership resort in Scottsdale, Arizona
under the Embassy Vacation Resort brand name, in each case under a
franchise arrangement. The Company and Promus have agreed on six markets
in which the Company and Promus will focus their joint venture efforts.
These six markets consist of three coastal areas of Florida, including
Miami, Naples and the Panhandle; the coastal region between Jacksonville,
Florida and Myrtle Beach, South Carolina; Scottsdale, Arizona; and Palm
Springs, California. The Company intends to franchise and/or jointly
develop additional vacation ownership resorts under the Hampton Vacation
Resort and the Embassy Vacation Resort brand names in the future and may
exercise its right to develop vacation ownership resorts under the
Homewood Vacation Resort name either jointly or as franchisee. The
Company and Promus are evaluating locations for the joint development of
vacation ownership resorts; however, at this time no commitments exist
for any joint venture resorts. See "Business--Affiliation with Promus."

. Vistana Branded Resorts. To capitalize on the Vistana brand and
reputation, the Company intends to seek other vacation ownership resort
development opportunities, including resorts affiliated with unique, non-
multi-hotel brand hotel properties, in selected vacation markets where,
among other things, it believes it can obtain effective marketing access
to potential customers.

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."

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. In furtherance of this intention, the Company has recently entered
into new project financing and receivables financing at more favorable rates
than it has historically enjoyed and is negotiating new credit facilities
which, if established, will be on terms that management believes are favorable.
See "Business--Growth Strategies--Improving Operating Margins."

Company's existing operations and enhance the Company's sales, marketing and
resort ownership. However, the Company currently has no contracts or capital
commitments relating to any other such acquisitions.

In utilizing this strategy, on September 16, 1997, the Company completed the
acquisition (the "Acquisition") of Success Developments, L.L.C., entities
comprising The Success Companies, and Points of Colorado, Inc. (collectively,
"Success and Points"), the developers of Eagle Point, Falcon Point and Villas
of Cave Creek. The Company acquired the stock of Success and Points for a
purchase price of approximately $24.0 million in cash and 638,444 shares of
Common Stock of the Company. Payout of 430,814 of such shares is contingent
upon Success and Points achieving certain operating criteria for calendar years
1998 through 2000. As a result of the Acquisition, the Company has a contract
to purchase undeveloped land in Scottsdale, Arizona on which the Company
intends to develop Embassy Vacation Resort--Scottsdale.

The Company believes Success and Points will serve as a strong foundation for
sales, marketing and resort operations in the western region of the United
States and will provide the Company with experience in direct marketing to
consumers in Arizona and Colorado. As a result of the strategic relationships
and operational expertise gained in this Acquisition, the Company believes it
will be better able to identify additional developments and acquisitions in
Arizona, Colorado and other western states.

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 June 30, 1997, the Company (exclusive of
Success and Points) had a portfolio of approximately 21,400 loans to customers
totaling approximately $125.2 million, with an average contractual yield of
13.9% per annum (compared to the Company's weighted average cost of funds of
10.5% per annum). As of June 30, 1997 (i) approximately 3.1% of the Company's
customer mortgages receivable were 60 to 120 days past due; and (ii)
approximately 5.3% 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 $10.0 million. During the six months ended June 30, 1997, the
Company charged approximately $3.0 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 the responsibility and 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.

This Prospectus relates only to the sale of Common Stock offered hereby.
Shareholders of the Company are not entitled to any rights with respect to any
of the Company's resorts solely as a result of their ownership of Common Stock.

THE RESORTS

The following table sets forth certain information as of June 30, 1997 and
for the six months then ended regarding each of the Company's existing vacation
ownership resorts, resorts under development and planned resorts (including
existing and planned resorts acquired in the Acquisition), including location,
the year 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 the
commencement of development by the Company and the number of Vacation Ownership
Interests sold during the six months ended June 30, 1997, the average sales
price of Vacation Ownership Interests sold during the six months ended June 30,
1997 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,
among other things, future land use, project development, site layout
considerations and customer demand. In addition, the Company's construction and
development of new vacation ownership 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
YEAR SALES UNITS AT RESORT SOLD(A) SALES RESORTS(A)
COMMENCED/ --------------- ------------ PRICE -------------------
VACATION OWNERSHIP EXPECTED TO TOTAL IN CURRENT PLANNED
RESORT LOCATION COMMENCE(B) CURRENT PLANNED TOTAL 1997 1997(A) INVENTORY EXPANSION
- ------------------------ ------------------- ----------- ------- ------- ------ ----- ------- --------- ---------

EXISTING RESORTS:
Vistana Resort (c) Orlando, Florida 1980 1,116 1,539 58,383 3,459(d) $10,259(d) 1,657 21,573
Vistana's Beach Hutchinson Island,
Club (e) Florida 1989 76 76 3,899 50 $ 9,318 29 0
Hampton Vacation
Resort--Oak
Plantation (f) Kissimmee, Florida 1996 242 242 680 547 $ 7,552 11,735 0
Eagle Point Resort (g) Vail, Colorado 1985 54 54 3,757 207 $ 7,773 54 0
Falcon Point Resort (h) Avon, Colorado 1985 58 82 3,437 152 $10,964 409 1,224
Villas of Cave Creek (i) Cave Creek, Arizona 1996 25 35 587 495 $11,239 849 510
RESORTS UNDER
DEVELOPMENT:
Embassy Vacation
Resort--Myrtle Beach Myrtle Beach,
(j) South Carolina 1997 -- 550 -- -- -- -- 28,050
Vistana Resort at World St. Augustine,
Golf Village (k) Florida 1998 -- 408 -- -- -- -- 20,808
PGA Vacation Resort by Port St. Lucie,
Vistana (l) Florida 1998 -- 387 -- -- -- -- 19,737
PLANNED RESORTS:
Embassy Vacation Scottsdale,
Resort--Scottsdale (m) Arizona 1998 -- 150 -- -- -- -- 7,650
----- ----- ------ ----- ------ ------
TOTAL 1,571 3,523 70,743 4,910 14,733 99,552
===== ===== ====== ===== ====== ======

- -------
(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 (although historically sales at Eagle Point, Falcon
Point and Villas of Cave Creek have been based on 52 weeks per unit per
year). For purposes of calculating Vacation Ownership Interests Sold and
Average Sales Price in 1997, 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 numbers are based on sales
of Vacation Ownership Interests on an annual basis only and assume the sale
of 51 weeks per year. To the extent that alternate-year Vacation Ownership
Interests or 52 weeks per unit per year are sold, the actual number of
unsold 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 Vistana Resort at June 30, 1997 includes (i) 1,116 current
existing units and (ii) 423 additional planned units (representing an
additional 21,573 unsold annual Vacation Ownership Interests). Construction
of 59 additional units was completed in 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 364 additional units is intended to be commenced from time to
time as conditions merit. Figures with respect to this resort 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 1,010 alternate-year Vacation Ownership Interests with an average
sales price of $7,529 and 2,449 annual Vacation Ownership Interests with an
average sales price of $11,385.
(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 29 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) Hampton Vacation Resort--Oak Plantation 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 June 30, 1997, the conversion of 156 units (representing 7,956 annual
Vacation Ownership Interests) had been completed. The Company intends to
convert the remaining 86 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. Hampton Vacation Resort--Oak
Plantation is operated on a franchise basis as the first Hampton Vacation
Resort pursuant to the Promus Agreement.
(g) Eagle Point Resort consists of 54 existing units, representing 2,808
Vacation Ownership Interests. This resort was acquired by the Company
pursuant to the Acquisition in September 1997, and is owned and operated by
the Company. All Vacation Ownership Interest sales reflected occurred prior
to the Acquisition.
(h) Falcon Point Resort consists of 58 existing units, representing 3,016
Vacation Ownership Interests and 24 additional planned units (representing
an additional 1,224 unsold annual Vacation Ownership Interests). This
resort was acquired by the Company pursuant to the Acquisition in September
1997, and is owned and operated by the Company. All Vacation Ownership
Interest sales reflected occurred prior to the Acquisition.
(i) Villas of Cave Creek consists of 25 existing units, representing 1,300
Vacation Ownership Interests and 10 additional planned units (representing
an additional 510 unsold annual Vacation Ownership Interests). This resort
was acquired by the Company pursuant to the Acquisition in September 1997,
and is owned and operated by the Company. All Vacation Ownership Interest
sales reflected occurred prior to the Acquisition.
(j) In December 1996, the Company acquired the initial 14 acres of unimproved
land in Myrtle Beach, South Carolina for the development of the Embassy
Vacation Resort--Myrtle Beach. The Company also has an option until
December 31, 2003 to acquire up to 26 additional acres of contiguous
property for phased expansion of this resort. The Company commenced
construction of the 44-unit first phase of this resort (representing 2,244
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
506 units at this resort (assuming acquisition of the remaining 26 acres)
will be commenced from time to time as conditions merit. Myrtle Beach will
be operated as an Embassy Vacation Resort franchise pursuant to the terms
of the Promus Agreement.
(k) 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.
(l) PGA Vacation Resort by Vistana will consist of an estimated 387 units,
representing an estimated 19,737 annual Vacation Ownership Interests, and
will be constructed by the Company on 25 acres of land which the Company
acquired in September 1997. The Company anticipates that it will commence
construction of the 40-unit first phase of this resort (representing 2,040
annual Vacation Ownership Interests) during the first quarter of 1998.
Because the Company constructs additional units at its resorts based on
general market conditions and other factors, construction of the remaining
347 units at this resort are expected to be commenced from time to time as
conditions merit.
(m) The Embassy Vacation Resort--Scottsdale will consist of an estimated 150
units, representing 7,650 Vacation Ownership Interests, and will be
constructed by the Company on approximately 10 acres of land which the
Company intends to acquire prior to December 1997 pursuant to an existing
contract entered into by Success and Points. The Company anticipates that
it will commence construction of the 150 units (representing 7,650 annual
Vacation Ownership Interests) during the first half of 1998. The Scottsdale
property will be operated as an Embassy Vacation Resort franchise pursuant
to the Promus Agreement.

CORPORATE BACKGROUND

The Company was incorporated in the State of Florida in December 1996 to
effect the Formation Transactions (as defined herein) and the initial public
offering of 6,382,500 shares of the Common Stock which was completed on March
5, 1997 (the "Initial Public 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.

THE OFFERING

Common Stock offered by the
Company..................... 4,000,000 shares(1)
Common Stock to be
outstanding after the
Offering.................... 23,007,630 shares(1)(2)
Use of Proceeds.............. The Company intends to use approximately $62.2
million of the net proceeds of the Offering to
repay outstanding indebtedness and the balance
to fund the acquisition, development and
expansion of existing and future resorts, and
working capital and general corporate purposes.
Pending any such additional uses, the Company
will invest the remaining proceeds in commercial
paper, bankers' acceptances, other short-term
investment grade securities and money-market
accounts.
Nasdaq National Market
symbol...................... VSTN

- --------
(1) Assumes no exercise of the Underwriters' over-allotment option. See
"Underwriting."
(2) Does not include 1,854,000 shares of Common Stock issuable upon exercise
of options outstanding as of the date of this Prospectus under the
Vistana, Inc. Stock Plan (the "Stock Plan") or 430,814 shares of Common
Stock deliverable on a contingent basis in connection with the
Acquisition. See "Management--Stock Plan" and "Business--the Acquisition."

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, the
Acquisition, pending developments, competition, the historical concentration of
the Company's business in the Orlando and Florida markets, dependence on key
personnel, the effective control of the Company by the Principal Shareholders
(as defined herein), general economic conditions, the Company's development and
construction activities, the Company's customer financing activities,
governmental regulation, the limited trading history of the Common Stock 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 OF THE
COMPANY(A)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND OPERATING DATA)

HISTORICAL PRO FORMA (UNAUDITED)
--------------------------------------- -----------------------------
YEAR ENDED YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31, JUNE 30,
--------------------------------------- ------------ ----------------
1992 1993 1994 1995 1996 1996(B) 1997(B)
------- ------- ------- ------- ------- ------------ ----------------

STATEMENT OF OPERATIONS:
Revenues:
Vacation Ownership
Interest sales........ $48,503 $55,658 $54,186 $50,156 $60,063 $ 74,125 $ 51,545
Interest............... 4,662 5,096 7,654 12,886 15,546 16,629 9,959
Resort................. 9,977 10,877 11,834 12,613 13,587 13,706 8,056
Telecommunications..... 1,703 1,980 3,378 4,802 7,054 7,054 3,195
Other.................. 489 551 584 652 686 1,371 1,286
------- ------- ------- ------- ------- ---------- ----------
Total revenues.......... 65,334 74,162 77,636 81,109 96,936 112,885 74,041
------- ------- ------- ------- ------- ---------- ----------
COSTS AND OPERATING
EXPENSES:
Vacation Ownership
Interest cost of
sales................. 10,254 11,521 11,391 12,053 14,595 17,946 12,259
Sales and marketing.... 17,689 21,866 22,872 22,318 27,877 33,844 24,096
Loan portfolio
Interest expense--
treasury.............. 1,556 2,070 3,605 6,516 6,865 8,066 4,094
Provision for doubtful
accounts.............. 3,405 3,903 3,803 3,522 4,271 4,456 2,986
Resort................. 8,594 9,493 10,037 10,585 11,089 11,089 6,562
Telecommunications..... 1,358 1,537 2,520 3,654 5,613 5,613 2,580
General and
administrative........ 6,628 7,419 7,988 6,979 7,873 10,118 6,467
Depreciation and
amortization.......... 875 875 1,392 2,215 2,553 3,123 1,832
Interest expense--
other................. 2,523 2,269 2,106 3,168 4,154 965 715
Other.................. 1,688 1,318 1,241 1,020 443 532 1,566
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 96,866 63,157
------- ------- ------- ------- ------- ---------- ----------
Operating income........ 10,362 11,511 10,349 5,631 10,489 16,019 10,884
Excess value
recognized............ 1,151 701 365 219 105 105 36
Minority interest
income................ -- -- -- -- -- -- 50
------- ------- ------- ------- ------- ---------- ----------
Pretax income........... 11,513 12,212 10,714 5,850 10,594 16,124 10,970
Provision for taxes.... -- -- -- -- -- 6,127 4,169
------- ------- ------- ------- ------- ---------- ----------
Net income.............. $11,513 $12,212 $10,714 $ 5,850 $10,594 $ 9,997 $ 6,801
======= ======= ======= ======= ======= ========== ==========
Pro forma net
income(c).............. $ 6,907 $ 7,780 $ 6,730 $ 3,724 $ 6,871
Pro forma net income per
share of Common Stock.. .53 .36
Pro forma weighted
average shares of
Common Stock
outstanding............ 19,007,630 19,007,630

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

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

JUNE 30, 1997
-----------------------
ACTUAL AS ADJUSTED(G)
-------- --------------

BALANCE SHEET DATA (AT END OF PERIOD):
Cash (including restricted cash)........................ $ 14,131 $
Total assets............................................ $196,858 $
Notes and mortgages payable............................. $ 84,526 $
Shareholders' equity.................................... $ 66,068 $

- ----
(a) The Summary Financial Information was derived from the "Selected Combined
Historical Financial Information of the Company" 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 of the Company," "Pro Forma Combined Financial
Information," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and the Company's Combined
Financial Statements and related Notes thereto appearing elsewhere in
this Prospectus.
(b) Reflects the effects of the Formation Transactions and the treatment of
the combined Company as a C corporation rather than the treatment of the
Affiliated Companies (as defined herein) as S corporations and limited
partnerships for federal income tax purposes (but excludes one-time tax
charges resulting from such conversion) the Initial Public Offering and
the application of the net proceeds to the Company therefrom and the
acquisition of all of the outstanding stock of Success and Points for
approximately $24 million in cash (financed with bank borrowings of
approximately $24 million) and 638,444 shares of Common Stock. Payout of
430,814 of such shares is contingent upon Success and Points achieving
certain operating results for calendar years 1998 through 2000.
(c) Reflects the effect on historical statements, assuming the 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.
(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:

SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------------- ----------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------

Net Income............ $11,513 $12,212 $10,714 $ 5,850 $10,594 $ 5,520 $(7,800)
Interest expense--
treasury............. 1,556 2,070 3,605 6,516 6,865 3,324 3,130
Interest expense--
other................ 2,523 2,269 2,106 3,168 4,154 2,040 1,071
Taxes................. 0 0 0 0 0 0 15,499
Depreciation and
amortization......... 875 875 1,392 2,215 2,553 1,074 1,412
Amortization of
discount on customer
mortgages
receivable........... 0 0 0 (2,062) (2,757) (1,085) (1,531)
Excess value
recognized........... (1,151) (701) (365) (219) (105) (70) (36)
------- ------- ------- ------- ------- ------- -------
EBITDA................ $15,316 $16,725 $17,452 $15,468 $21,304 $10,803 $11,745
======= ======= ======= ======= ======= ======= =======

(e) Includes both annual and alternate-year Vacation Ownership Interests.
(f) Inventory classified as annual Vacation Ownership Interests.
(g) Adjusted to give effect to the Offering and the application of the net
proceeds to the Company therefrom.

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, Myrtle Beach, South Carolina and Scottsdale, Arizona 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 and qualified construction tradesmen at competitive prices;
(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 units.

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 develop
jointly a vacation ownership resort within the first three years of the term of
the Promus Agreement (which commenced on December 24, 1996), either party will
be entitled to terminate the Promus Agreement. This timetable 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. The amount
of expenditures which the Company may be required to incur and the amount of
obligations which the Company may be required to satisfy will depend upon,
among other things, the extent to which the applicable franchise agreement
requires the Company to incur construction and development costs, operating
expenses, capital expenditures and maintenance costs. 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 other hotel companies, even where such developments or
agreements would be in the Company's best interests. See "Business--Affiliation
with Promus."

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 which focus on the
vacation ownership industry, such as Signature Resorts, Inc. ("Signature"),
Fairfield Communities, Inc. ("Fairfield"), Vacation Break U.S.A., Inc.
("Vacation Break"), Silverleaf Resorts, Inc. ("Silverleaf"), and Trendwest
Resorts, Inc. ("Trendwest"), 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"). 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.

HISTORICAL CONCENTRATION OF ACTIVITIES IN ORLANDO AND FLORIDA MARKETS

Prior to the Acquisition, 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.
See "Business--The Resorts." Although the Company recently acquired vacation
ownership resorts in Colorado and Arizona and is constructing and plans to
develop additional vacation ownership resorts outside the Orlando area, the
current concentration of the Company's vacation ownership resorts in the
Orlando market 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.

RISKS RELATED TO THE ACQUISITION

The September 16, 1997 acquisition of Success and Points represents the
Company's initial entry into a geographic market outside Florida and South
Carolina. Therefore, the Company may be exposed to a number of risks,
including, but not limited to risks associated with the lack of local market
knowledge and experience. In addition, the future operating results of Success
and Points depend to a significant extent on the experience and abilities of
Donald J. Dubin, the President and Chief Executive Officer of Success and Larry
D. Doll, the President and Chief Executive Officer of Points. In addition, the
Company's marketing and sales of Vacation Ownership Interests are subject to
extensive regulation by various states in which the Company has not previously
conducted operations, and any failure to comply with such regulations, or any
increases in the costs of compliance, could have a material adverse effect on
the Company. See "--Risks Associated with Governmental Regulation."

The Company and Success and Points have different systems and procedures in
many operational areas which must be integrated. There can be no assurance that
such integration will be successfully accomplished. The difficulties of such
integration may be increased by the necessity of coordinating geographically
separate organizations. The integration of certain operations following the
Acquisition will require the dedication of management resources which may
temporarily re-direct attention from the day-to-day business of the combined
companies. Failure to effectively accomplish the integration of the two
companies' operations could have a material adverse effect on the Company's
results of operations and financial condition.

In addition, future earnings will be adversely impacted by the amortization
of the goodwill associated with the Acquisition. Based upon pro forma goodwill
of approximately $17 million and an amortization period of 20 years, earnings
will be adversely impacted by approximately $850,000 per year. The goodwill
included in this calculation does not include the impact of the contingent
consideration associated with the Acquisition.

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."

EFFECTIVE CONTROL BY PRINCIPAL SHAREHOLDERS; SHAREHOLDERS' AGREEMENT

After the 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 "Principal
Shareholders")) will own and/or have voting control of approximately 53.4% of
the outstanding shares of Common Stock (approximately 52.1% if the
Underwriters' over-allotment option is exercised in full). As a result, by
maintaining their ownership of Common Stock, the Principal Shareholders will
have the power to exert substantial influence over the election of the Board of
Directors, the determination of the policies of the Company, the appointment of
the persons constituting the Company's management and the determination of the
outcome of corporate actions requiring shareholder approval. In addition,
pursuant to the Shareholders' Agreement (as defined herein), the Principal
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 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 from the buyers of
Vacation Ownership Interests. 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 construct
and develop all of the vacation ownership resorts it plans to develop and
market. 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 development of Vistana Resort at World Golf Village;
(ii) complete expansion projects currently under development at Vistana Resort
and those planned at Falcon Point Resort and Villas of Cave Creek; (iii)
complete the development of the Embassy Vacation Resort--Myrtle Beach (or
acquire the additional 26 acres at such location); (iv) complete the
development of PGA Vacation Resort by Vistana; (v) undertake or complete the
development of the Embassy Vacation Resort--Scottsdale; or (vi) 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
materially 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 historically 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 in part 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 and market, 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 vacation ownership resorts, 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 vacation ownership resorts 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. 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 limited 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. 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."

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 the 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, other than its vacation ownership resorts in
Colorado and Arizona (each of which is currently qualified for participation
in the exchange network operated by II), 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 exchange
network or any other exchange network, or that the Company's customers will
continue to be satisfied with RCI's exchange network or any other 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 or II cease to be leading Vacation Ownership Interest exchange
networks, the Company's sales of Vacation Ownership Interests could be
materially adversely affected. Moreover, the Company's agreement with RCI
generally provides that until May 2001, the RCI exchange program will be the
only exchange program permitted at resorts developed 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 merged with RCI and, accordingly, 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 many states, including Arizona and
Florida, 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, prize, 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 licensure laws, travel
sales licensure laws, anti-fraud laws, telemarketing laws, prize, 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 environmental
assessment reports (which typically involve inspection without soil sampling
or ground water analysis) have been prepared by independent environmental
consultants for each of the Company's existing resorts, properties under
construction or being expanded and properties subject to acquisition. None of
these reports indicate that any environmental conditions exist at any of these
properties 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, including Arizona, Colorado and South Carolina, 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--Seasonality."

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, directly or indirectly, 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 six months ended June
30, 1997, approximately 1.6% of the Company's revenues were derived from
management fees paid by homeowners' associations pursuant to the homeowners'
association management agreements. No single management agreement with a
homeowners' association accounted for more than 0.3% 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 certain of 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, certain of 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.

LIMITED TRADING HISTORY AND POSSIBLE VOLATILITY OF STOCK PRICE

The Common Stock first became publicly traded on February 28, 1997. Since
then, the per share price of the Common Stock has risen substantially from the
Initial Public Offering price of $12.00 per share. Prior to and after the
Offering, the market price of the Common Stock is likely to be highly volatile
and could be subject to wide fluctuations in response to quarterly variations
in operating results, announcements of new acquisitions, changes in financial
estimates by securities analysts or other events or factors. The market price
of the Common Stock also may be affected by the Company's ability to meet
analysts' expectations, and any failure to meet such expectations, even if
minor, could have a material adverse effect on the market price of the Common
Stock. In addition, the stock market has experienced significant price and
volume fluctuations affecting the market prices of equity securities of many
companies and that have often been unrelated to the operating performance of
such companies. These broad market fluctuations may adversely affect the market
price of the Common Stock. In the past, following periods of volatility in the
market price of a company's securities, securities class action litigation has
often been instituted against such a company. Any such litigation instigated
against the Company could result in substantial costs and a diversion of
management's attention and resources, which could have a material adverse
effect on the Company's business, results of operations or financial condition.
See "Price Range of Common Stock."

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
consists 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. See "--Effective Control by Principal
Shareholders; Shareholders' Agreement."

Preferred Stock. The Board of Directors has 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 are 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."

DIVIDENDS

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 23,007,630 shares of Common Stock, excluding shares of Common
Stock issuable upon exercise of stock options granted by the Company and
430,814 shares of Common Stock deliverable on a contingent basis in connection
with the Acquisition. 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 -day 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 Initial Public Offering,
certain shares of Common Stock (i) held by the Principal Shareholders and (ii)
purchased by certain employees of the Company pursuant to the exercise of
options granted to such employees by the Principal 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. Also, at certain times commencing one year following the
completion of the Acquisition, certain shares of Common Stock held by the
former owners of Success and Points may be sold in the public market pursuant
to a registration statement 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 4,000,000 shares of
Common Stock offered by the Company hereby, based on an estimated offering
price of $26 1/8 per share, after deducting estimated underwriting discounts
and commissions and anticipated expenses of the Offering, are estimated to be
$ million ($ million, if the Underwriters' over-allotment option is
exercised in full). The Company intends to use approximately (i) $62.2 million
of the net proceeds to repay outstanding indebtedness and accrued interest;
and (ii) $ million of the net 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 net proceeds in commercial paper, bankers'
acceptances, other short-term investment-grade securities and money-market
accounts.

Indebtedness to be repaid out of the net proceeds to the Company from the
Offering bears interest at rates currently ranging between approximately 8.2%
and 11.0% per annum and will mature at various times over the next seven 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 customer mortgages receivable,
development of vacation ownership resorts, the Acquisition and general
corporate purposes. None of the net proceeds from the Offering will be used to
pay any delinquent indebtedness.

DIVIDEND POLICY

Except for certain distributions made prior to and in connection with the
Formation Transactions, the Company has never declared or paid any dividends
on its capital stock. 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.

PRICE RANGE OF COMMON STOCK

The Initial Public Offering of Common Stock was consummated in March 1997 at
an initial public offering price of $12.00 per share. The Company's Common
Stock is quoted on the Nasdaq National Market under the symbol "VSTN." The
following table sets forth, for the periods indicated, the range of high and
low sale prices for the Common Stock, as quoted on the Nasdaq National Market.

COMMON STOCK
-------------------
HIGH LOW
------ ------------

Year Ending December 31, 1997:
First Quarter (commencing February 28, 1997).............. 15 3/8 11/1///1//6/
Second Quarter............................................ 15 1/2 9 3/8
Third Quarter............................................. 21 1/2 14 7/8
Fourth Quarter (through October 15, 1997)................. 27 22 3/8

A recent last reported sales price for the Company's Common Stock, as quoted
on the Nasdaq National Market, is set forth on the cover of this Prospectus.
On October 15, 1997, there were approximately 45 holders of record of the
Company's Common Stock.

CAPITALIZATION

The following table sets forth, as of June 30, 1997, the consolidated
capitalization of the Company on an actual basis and as adjusted to give
effect to the sale of the Common Stock offered hereby and the application of
the net proceeds 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 JUNE 30, 1997
---------------------------------
ACTUAL AS ADJUSTED
--------------- -----------------
(UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS)

Debt:
Notes and mortgages payable to financial
institutions(1)............................ $ 84,526 $
--------------- --------------
Total..................................... 84,526
--------------- --------------
Shareholders' Equity:
Preferred Stock, $.01 par value, 5,000,000
shares authorized, none issued and out-
standing...................................
Common Stock, $.01 par value, 100,000,000
shares authorized, 18,800,000 shares issued
and outstanding (22,800,000 shares as
adjusted for the Offering)(2).............. 188
Additional paid-in capital.................. 62,134
Retained earnings........................... 3,746
Total shareholders' equity.................. 66,068
--------------- --------------
Total capitalization...................... $ 150,594 $
=============== ==============

- --------
(1) Includes notes collateralized by customer mortgages receivable. Does not
include approximately $24.0 million of indebtedness incurred in connection
with the Acquisition and an additional $7.8 million borrowed under a
mortgage receivable facility, both of which will be fully repaid with
proceeds of the Offering. See "Use of Proceeds" and "Business--The
Acquisition."
(2) Does not include an aggregate of 1,854,000 shares of Common Stock issuable
pursuant to existing options granted pursuant to the Stock Plan, an
aggregate of 638,444 shares of Common Stock issued in connection with the
Acquisition, 207,630 of which were delivered at the closing and 430,814 of
which are deliverable on a contingent basis, and up to 600,000 shares of
Common Stock which the Underwriters may purchase from the Company pursuant
to their over-allotment option. See "Management--Stock Plan," "Business--
The Acquisition" and "Underwriting."

SELECTED COMBINED HISTORICAL FINANCIAL INFORMATION OF THE COMPANY
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE AND OPERATING DATA)

The following table sets forth selected combined historical financial
information of the Company for the years ended December 31, 1992, 1993, 1994,
1995 and 1996. The selected combined historical financial information of the
Company (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 of the Company 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 of the Company has been derived from unaudited
financial statements prepared by the Company. The selected combined historical
financial information presented below as of and for the six months ended June
30, 1996 and 1997 are derived from the unaudited combined and consolidated
financial statements of the Company included elsewhere in this Prospectus. In
the opinion of the management of the Company, the unaudited financial
statements include all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial information included
herein. Results for interim periods are not necessarily indicative of results
to be expected during the remainder of the current year or any future period.

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 SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
------------------------------------------- ---------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- ------- ------- -------

STATEMENT OF OPERATIONS:
REVENUES:
Vacation Ownership
Interest sales........ $ 48,503 $ 55,658 $ 54,186 $ 50,156 $60,063 $28,622 $40,083
Interest............... 4,662 5,096 7,654 12,886 15,546 7,149 8,923
Resort................. 9,977 10,877 11,834 12,613 13,587 7,125 8,050
Telecommunications..... 1,703 1,980 3,378 4,802 7,054 3,216 3,195
Other.................. 489 551 584 652 686 230 246
-------- -------- -------- -------- ------- ------- -------
Total revenues.......... 65,334 74,162 77,636 81,109 96,936 46,342 60,497
-------- -------- -------- -------- ------- ------- -------
COSTS AND OPERATING
EXPENSES:
Vacation Ownership
Interest cost of
sales................. 10,254 11,521 11,391 12,053 14,595 7,195 9,276
Sales and marketing.... 17,689 21,866 22,872 22,318 27,877 12,569 18,287
Loan portfolio
Interest expense--
treasury............ 1,556 2,070 3,605 6,516 6,865 3,324 3,130
Provision for
doubtful accounts... 3,405 3,903 3,803 3,522 4,271 2,034 2,809
Resort................. 8,594 9,493 10,037 10,585 11,089 5,984 6,562
Telecommunications..... 1,358 1,537 2,520 3,654 5,613 2,597 2,580
General and
administrative........ 6,628 7,419 7,988 6,979 7,873 3,377 4,957
Depreciation and
amortization.......... 875 875 1,392 2,215 2,553 1,074 1,412
Interest expense--
other................. 2,523 2,269 2,106 3,168 4,154 2,040 1,071
Other.................. 1,688 1,318 1,241 1,020 443 145 1,470
Deferred executive
incentive
compensation.......... 402 380 332 3,448 1,114 553 0
-------- -------- -------- -------- ------- ------- -------
Total costs and
operating expenses..... 54,972 62,651 67,287 75,478 86,447 40,892 51,554
-------- -------- -------- -------- ------- ------- -------
Operating income........ 10,362 11,511 10,349 5,631 10,489 5,450 8,943
Excess value
recognized............ 1,151 701 365 219 105 70 36
Minority Interest...... -- -- -- -- -- -- 50
-------- -------- -------- -------- ------- ------- -------
Income before income
taxes & extraordinary
item................... 11,513 12,212 10,714 5,850 10,594 5,520 9,029
Provision for taxes.... -- -- -- -- -- -- 2,803
Non-recurring charge
associated with the
change of tax
status................ -- -- -- -- -- -- 13,201
-------- -------- -------- -------- ------- ------- -------
Income (loss) before
extraordinary item.... 11,513 12,212 10,714 5,850 10,594 5,520 (6,975)
Extraordinary item
early extinguishment
of debt (net of
tax).................. -- -- -- -- -- -- 825
-------- -------- -------- -------- ------- ------- -------
Net income.............. $ 11,513 $ 12,212 $ 10,714 $ 5,850 $10,594 $ 5,520 $(7,800)
======== ======== ======== ======== ======= ======= =======

HISTORICAL
--------------------------------------------------------------------
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
------------------------------------------------ ------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------

CASH FLOW DATA:
EBITDA(a)............... $ 15,316 $ 16,725 $ 17,452 $ 15,468 $ 21,304 $ 10,803 $ 11,745
Cash flow provided by
(used in):
Operating activities... $ 17,544 $ 10,602 $ 13,215 $ 12,524 $ 15,629 $ 2,328 $ 4,576
Investing activities... $(21,244) $(20,444) $(20,383) $(22,651) $(26,351) $ (8,112) $(14,810)
Financing activities... $ 3,410 $ 11,085 $ 6,512 $ 15,131 $ 9,313 $ 6,103 $ 13,189
OPERATING DATA:
Number of resorts at end
of period ............. 2 2 2 2 3 2 3
Number of Vacation
Ownership Interests
sold(b)................ 4,980 5,679 5,582 5,190 5,794 2,805 4,056
Number of Vacation
Ownership Interests in
inventory at year
end(c)................. 1,967 3,781 3,822 3,054 14,774 3,142 13,421
Average price of
Vacation Ownership
Interests sold......... $ 9,740 $ 9,801 $ 9,707 $ 9,664 $ 10,366 $ 10,204 $ 9,882
BALANCE SHEET DATA (AT
YEAR END):
Cash (including
restricted cash)....... $ 3,779 $ 5,215 $ 4,864 $ 10,788 $ 9,981 $ 11,184 $ 14,131
Total assets............ $ 73,827 $ 99,431 $117,989 $140,651 $173,922 $150,089 $196,858
Long-term debt.......... $ 45,650 $ 57,474 $ 64,769 $101,504 $118,557 $109,384 $ 84,526
Shareholders' equity.... $ 12,254 $ 23,726 $ 33,658 $ 17,904 $ 26,648 $ 21,492 $ 66,068

- --------
(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 SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
------------------------------------------- ----------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------

Net Income.............. $11,513 $12,212 $10,714 $ 5,850 $10,594 $ 5,520 $(7,800)
Interest expense--
treasury............... 1,556 2,070 3,605 6,516 6,865 3,324 3,130
Interest expense--
other.................. 2,523 2,269 2,106 3,168 4,154 2,040 1,071
Taxes................... 0 0 0 0 0 0 15,499
Depreciation and
amortization........... 875 875 1,392 2,215 2,553 1,074 1,412
Amortization of discount
on customer mortgages
receivable............. 0 0 0 (2,062) (2,757) (1,085) (1,531)
Excess value
recognized............. (1,151) (701) (365) (219) (105) (70) (36)
------- ------- ------- ------- ------- ------- -------
EBITDA.................. $15,316 $16,725 $17,452 $15,468 $21,304 $10,803 $11,745
======= ======= ======= ======= ======= ======= =======

(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 balance sheet as of June 30, 1997
presents the historical combined balance sheets of the Company and Success and
Points. The purchase accounting adjustments, as described in the related notes,
are calculated as if the Success and Points acquisition had been consummated
effective June 30, 1997.

The unaudited pro forma combined statements of income for the six months
ended June 30, 1997 and for the year ended December 31, 1996 present the
combined results of operations of the Company and Success and Points. The
purchase accounting and other pro forma adjustments, as described in the
related notes and below, are calculated as if the Success and Points
acquisition had been effective January 1, 1996. In addition, the pro forma
statements of operations give effect to (i) the Formation Transactions and the
treatment of the combined Company as a C corporation rather than the treatment
of the Affiliated Companies as S corporations and limited partnerships for
federal income tax purposes; (ii) the Initial Public Offering and the
application of the net proceeds to the Company therefrom; and (iii) the
Acquisition. 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 Company's Historical 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" and the historical financial
statements of Success and Points.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)

FORMATION
TRANSACTIONS/
INITIAL HISTORICAL
PUBLIC THE SUCCESS
OFFERING COMPANIES ACQUISITION
HISTORICAL PRO FORMA AND POINTS PRO FORMA PRO FORMA
VISTANA, INC. ADJUSTMENTS SUBTOTAL OF COLORADO ADJUSTMENTS TOTAL
------------- ------------- ---------- ----------- ----------- ----------

Revenues:
Vacation Ownership
Interest Sales.......... $ 60,063 $ -- $ 60,063 $14,062 $ -- $ 74,125
Interest................. 15,546 -- 15,546 1,083 -- 16,629
Resort................... 13,587 -- 13,587 119 -- 13,706
Telecommunications....... 7,054 -- 7,054 -- -- 7,054
Other.................... 686 -- 686 685 -- 1,371
---------- --------- ---------- ------- ------- ----------
Total revenue........ 96,936 -- 96,936 15,949 -- 112,885
---------- --------- ---------- ------- ------- ----------
Costs and operating
expenses:
Vacation Ownership
Interests Cost of
sales................... 14,595 -- 14,595 3,351 -- 17,946
Sales and marketing...... 27,877 -- 27,877 5,967 -- 33,844
Loan portfolio:
Interest expense--
treasury.............. 6,865 (961)(a) 5,904 199 1,963 (e) 8,066
Provision for doubtful
accounts.............. 4,271 -- 4,271 185 -- 4,456
Resort................... 11,089 -- 11,089 -- -- 11,089
Telecommunications....... 5,613 -- 5,613 -- -- 5,613
General and
administrative.......... 7,873 -- 7,873 2,245 -- 10,118
Depreciation and
amortization............ 2,553 (258)(a) 2,295 -- 828 (c) 3,123
Interest expense--other.. 4,154 (3,189)(a) 965 -- -- 965
Deferred executive
compensation............ 1,114 -- 1,114 -- -- 1,114
Other.................... 443 -- 443 89 -- 532
---------- --------- ---------- ------- ------- ----------
Total costs and
operating expenses.. 86,447 (4,408) 82,039 12,036 2,791 96,866
---------- --------- ---------- ------- ------- ----------
Operating income..... 10,489 4,408 14,897 3,913 (2,791) 16,019
Excess value recognized.... 105 -- 105 -- -- 105
---------- --------- ---------- ------- ------- ----------
Income before income
taxes............... 10,594 4,408 15,002 3,913 (2,791) 16,124
Provision for income
taxes..................... -- 5,382 (b) 5,382 204 541 (d) 6,127
---------- --------- ---------- ------- ------- ----------
Net income (loss).... $ 10,594 $ (974) $ 9,620 $ 3,709 $(3,332) $ 9,997
========== ========= ========== ======= ======= ==========
Historical net income per
share of common stock..... $ 0.75
==========
Historical weighted average
shares outstanding........ 14,175,000
==========
Pro forma income per share
of common stock........... $ 0.51 $ .53
========== ==========
Pro forma weighted average
shares of common stock
outstanding............... 1,482,044 18,800,000 207,630 19,007,630
========= ========== ======= ==========

- -------
(a) Reflects the effect on the 1996 historical statement of income of the
assumed issuance of common stock on January 1, 1996 and the reduction of
interest expense with the early retirement of $38.9 million of debt.
(b) Reflects the effect on the 1996 historical statement of income referred to
in (a) above and assumes the Company had been treated as a C corporation,
rather than the treatment of the Company's predecessors as S corporations
and limited partnerships for federal income tax purposes.
(c) Reflects amortization of goodwill.
(d) Reflects the effect on the 1996 historical statement of income and assumes
all of the entities comprising Success had been treated as C corporations,
rather than as limited liability companies ("LLC's") for federal income tax
purposes.
(e) Reflects interest expense on bank borrowings of approximately $24 million
at LIBOR plus 2.5% (8.22% per annum at September 30, 1997). See "Use of
Proceeds."

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
(AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)

FORMATION
TRANSACTIONS/INITIAL
PUBLIC OFFERING HISTORICAL ACQUISITION
HISTORICAL PRO FORMA THE SUCCESS COMPANIES PRO FORMA
VISTANA, INC. ADJUSTMENTS SUBTOTAL AND POINTS OF COLORADO ADJUSTMENTS TOTAL
------------- -------------------- ---------- ---------------------- ----------- ----------

Revenues:
Vacation Ownership
Interest Sales........ $ 40,083 $ -- $ 40,083 $11,462 $ -- $ 51,545
Interest............... 8,923 -- 8,923 1,036 -- 9,959
Resort................. 8,050 -- 8,050 6 -- 8,056
Telecommunications..... 3,195 -- 3,195 -- -- 3,195
Other.................. 246 -- 246 1,040 -- 1,286
---------- --------- ---------- ------- ------- ----------
Total revenue...... 60,497 -- 60,497 13,544 -- 74,041
---------- --------- ---------- ------- ------- ----------
Costs and operating
expenses:
Vacation Ownership
Interests cost of
sales................. 9,276 -- 9,276 2,983 -- 12,259
Sales and marketing.... 18,287 -- 18,287 5,809 -- 24,096
Loan portfolio:
Interest expense--
treasury............ 3,130 (358)(a) 2,772 340 982 (f) 4,094
Provision for
doubtful accounts... 2,809 -- 2,809 177 -- 2,986
Resort................. 6,562 -- 6,562 -- -- 6,562
Telecommunications..... 2,580 -- 2,580 -- -- 2,580
General and
administrative........ 4,957 -- 4,957 1,510 -- 6,467
Depreciation and
amortization.......... 1,412 -- 1,412 -- 420 (d) 1,832
Interest expense--
other................. 1,071 (356)(a) 715 -- -- 715
Other.................. 1,470 -- 1,470 96 -- 1,566
---------- --------- ---------- ------- ------- ----------
Total costs and
operating
expenses.......... 51,554 (714) 50,840 10,915 1,402 63,157
---------- --------- ---------- ------- ------- ----------
Operating Income... 8,943 714 9,657 2,629 (1,402) 10,884
Excess value
recognized............. 36 -- 36 -- -- 36
Minority interest
income................. 50 -- 50 -- -- 50
---------- --------- ---------- ------- ------- ----------
Income before
income taxes...... 9,029 714 9,743 2,629 (1,402) 10,970
Provision for income
taxes.................. 2,803 900 (b) 3,703 695 (229)(e) 4,169
Non-recurring charge
associated with the
change in tax status... 13,201 (13,201)(c) -- -- -- --
---------- --------- ---------- ------- ------- ----------
Net income (loss)
before
extraordinary
item.............. $ (6,975) $ 13,015 $ 6,040 $ 1,934 $(1,173) $ 6,801
========== ========= ========== ======= ======= ==========
Historical net income
(loss) per share before
extraordinary item..... $ (0.40)
==========
Historical weighted
average shares
outstanding............ 17,317,956
==========
Pro forma net income per
share of common stock.. $ 0.32 $ 0.36
---------- ----------
Pro forma weighted
average shares of
common stock
outstanding............ 1,482,044 18,800,000 207,630 19,007,630
========= ========== ======= ==========

- --------
(a) Reflects the effect on the 1997 historical statement of income of the
assumed issuance of common stock on January 1, 1997 and the reduction of
interest expense with the early retirement of $38.9 million of debt.
(b) Reflects the effect on the 1997 historical statement of income referred to
in (a) above and assumes the Company had been treated as a C corporation,
rather than the treatment of the Company's predecessors as S corporations
and limited partnerships for federal income tax purposes.
(c) Reflects the elimination of the non-recurring charge for deferred taxes
that relate to the conversion of the tax status of the Company's
predecessor entities.
(d) Reflects amortization of goodwill.
(e) Reflects the effect on the 1997 historical statement of income and assumes
all of the entities comprising Success had been treated as C corporations,
rather than as LLC's for federal income tax purposes.
(f) Reflects interest expense on bank borrowings of approximately $24 million
at LIBOR plus 2.5% (8.22% per annum at September 30, 1997). See "Use of
Proceeds."

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 1997
(AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)

HISTORICAL
THE SUCCESS COMPANIES ACQUISITION
HISTORICAL AND POINTS OF PRO FORMA COMPANY
VISTANA, INC. COLORADO ADJUSTMENTS PRO FORMA
------------- --------------------- ----------- ---------
ASSETS

Cash and cash
equivalents............ $ 9,089 $ 819 $ -- $ 9,908
Restricted cash......... 5,042 -- -- 5,042
Customer mortgages
receivable, net........ 111,129 19,527 -- 130,656
Other receivables....... 3,959 988 -- 4,947
Inventory of Vacation
Ownership Interest..... 20,952 4,787 -- 25,739
Construction in
progress............... 13,001 -- -- 13,001
-------- ------- ------- --------
Total Vacation
Ownership
Interest........... 33,953 4,787 38,740
Prepaid expenses and
other assets........... 13,056 984 14,040
Land held for
development............ 7,664 -- -- 7,664
Property and equipment,
net.................... 12,966 459 -- 13,425
Goodwill................ -- -- 16,895 (a) 16,895
-------- ------- ------- --------
Total assets........ $196,858 $27,564 $16,895 $241,317
======== ======= ======= ========

LIABILITIES AND
SHAREHOLDERS' EQUITY

Accounts payable and
accrued liabilities.... $ 5,401 $ 1,298 $ 873 (b) $ 7,572
Accrued compensation and
benefits............... 7,524 443 -- 7,967
Customer deposits....... 7,008 201 -- 7,209
Deferred income taxes... 15,217 1,518 1,367 (c) 18,102
Due to related parties.. -- 285 -- 285
Other liabilities....... 6,721 907 -- 7,628
Notes and mortgages
payable................ 84,526 9,968 23,885 (d) 118,379
-------- ------- ------- --------
Total liabilities... 126,397 14,620 26,125 167,142
Minority interest....... 4,393 -- -- 4,393
Common stock............ 188 -- 2 (e) 190
Additional paid-in
capital................ 62,134 -- 3,712 (e) 65,846
Retained earnings....... 3,746 -- -- 3,746
Equity.................. -- 12,944 (12,944)(f) --
-------- ------- ------- --------
Total shareholders'
equity............. 66,068 12,944 (9,230) 69,782
-------- ------- ------- --------
Total liabilities
and shareholders'
equity............. $196,858 $27,564 $16,895 $241,317
======== ======= ======= ========

- --------
(a) Reflects goodwill.
(b) Reflects accrued acquisition cost of $873.
(c) Reflects the change in the deferred tax liability due to the Acquisition.
(d) Reflects bank borrowings of $23,885 at 8.22% per annum to finance the cash
portion of the Acquisition purchase price. See "Use of Proceeds."
(e) Reflects the issuance of 207,630 shares of Common Stock at $17.89 per
share, the closing price of the Common Stock on the closing date of the
Acquisition.
(f) Reflects the elimination of the investment in Success and Points' equity.

NOTES TO UNAUDITED PRO FORMA

CONDENSED COMBINED FINANCIAL STATEMENTS

NOTE A. BASIS OF PRESENTATION

The historical statements of operations for Success and Points for the year
ended December 31, 1996 and for the six months ended June 30, 1997 include
companies whose year ends were converted from March 31, to conform to the
Company's year end of December 31.

NOTE B. GOODWILL

Following is a calculation of goodwill:

($ amounts in thousands)

Total cost of the Acquisition*................... $ 28,472
Fair value of assets acquired.................... (11,577)
--------
Goodwill......................................... $ 16,895
========

- --------
*Does not consider contingent consideration of approximately 430,000 shares
of Common Stock (See Note C).

At this time, the Company's management believes that the fair value of net
assets acquired approximates Success and Points' book value.

NOTE C. CONTINGENT CONSIDERATION

Payout of approximately 430,000 of the shares of Common Stock is contingent
upon Success and Points achieving certain criteria. In each of the calendar
years 1998 through 2000 upon satisfying certain net proceeds from sales levels
as set forth in the Agreement and Plan of Reorganization, dated August 15,
1997, a portion of the contingent consideration can be earned by the selling
parties. The Company's management has determined that the contingent
consideration is an additional cost of the Acquisition, rather than
compensation expense. In addition, such contingent shares are not assumed to be
outstanding in the accompanying pro forma financial statements, as the amount
is not recorded until the contingent criteria have been met. If the contingent
criteria are met and the shares are distributed, the Company shall record the
current fair value of the shares as an additional cost of the purchase. The
potentially affected assets, most notably goodwill, shall be amortized over the
remaining life of the assets. The estimated impact on future earnings through
the amortization of goodwill associated with the contingent consideration would
be approximately $380,000 per year assuming a stock price of $17.89 and
assuming all of the contingent shares are earned. This adjustment will change
based upon the fair value of the stock at the time the contingent shares are
earned and based upon the number of shares earned.

NOTE D. AMORTIZATION PERIOD OF GOODWILL

The goodwill as a result of the acquisition of Success and Points will be
amortized over a 20-year period.

NOTE E. INCOME TAXES

The pro forma total effective income tax rate was assumed to be 38%.

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 historically has not sold Vacation
Ownership Interests prior to completion of construction; however, in connection
with the Embassy Vacation Resort--Myrtle Beach the Company is selling, and in
other appropriate circumstances may sell, Vacation Ownership Interests prior to
completion of construction. To the extent 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 prior to the Acquisition.
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 and the six months ended June 30,
1996 and 1997.

SIX MONTHS
YEARS ENDED ENDED
DECEMBER 31 JUNE 30
----------------------- ---------------
1994 1995 1996 1996 1997
------ ------ ------- ------- ------

STATEMENT OF OPERATIONS:
AS A PERCENTAGE OF TOTAL REVENUES
Vacation Ownership Interest sales.. 69.8% 61.8% 62.0% 61.8% 66.3%
Interest revenue................... 9.9% 15.9% 16.0% 15.4% 14.7%
Resort revenue..................... 15.2% 15.6% 14.0% 15.4% 13.3%
Telecommunications revenue......... 4.4% 5.9% 7.3% 6.9% 5.3%
Other.............................. 0.7% 0.8% 0.7% 0.5% 0.4%
------ ------ ------- ------- ------
Total revenues................... 100.0% 100.0% 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% 25.1% 23.1%
Sales and marketing................ 42.2% 44.5% 46.4% 43.9% 45.6%
Provision for doubtful accounts.... 7.0% 7.0% 7.1% 7.1% 7.0%
AS A PERCENTAGE OF INTEREST REVENUES
Interest expense--treasury......... 47.1% 50.6% 44.2% 46.5% 35.1%
AS A PERCENTAGE OF TOTAL REVENUES
General and administrative......... 10.3% 8.6% 8.1% 7.3% 8.2%
Depreciation and amortization...... 1.8% 2.7% 2.6% 2.3% 2.3%
Interest expense--other............ 2.7% 3.9% 4.3% 4.4% 1.8%
Other.............................. 1.6% 1.3% 0.5% 0.3% 2.4%
Total costs and operating
expenses......................... 86.7% 93.1% 89.2% 88.2% 85.2%
AS A PERCENTAGE OF RESORT REVENUES
Resort expenses(1)................. 84.8% 83.9% 81.6% 84.0% 81.5%
AS A PERCENTAGE OF
TELECOMMUNICATIONS REVENUES
Telecommunications expenses(1)..... 74.6% 76.1% 79.6% 80.8% 80.8%
SELECTED OPERATING DATA:
Number of resorts at year end...... 2 2 3 2 3
Number of Vacation Ownership
Interests sold(2)................. 5,582 5,190 5,794 2,805 4,056
Number of Vacation Ownership
Interests in inventory at end of
period(3)......................... 3,822 3,054 14,774 3,142 13,421
Average price of Vacation Ownership
Interests sold.................... $9,707 $9,664 $10,366 $10,204 $9,882

- --------
(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 the six months ended June 30, 1997 to the six months ended June
30, 1996.

For the six months ended June 30, 1997, the Company recognized total revenues
of $60.5 million compared to $46.3 million for the six months ended June 30,
1996, an increase of $14.2 million, or 30.6%. This increase is primarily due to
a $11.5 million increase in sales of Vacation Ownership Interests from $28.6
million during 1996 to $40.1 million during 1997, an increase of 40.0%.
Vacation Ownership Interest sales increased due to a 44.6% increase in the
number of Vacation Ownership Interests sold, reduced by a 3.2% decrease in the
average sales price due to the inclusion of the Hampton Vacation Resort--Oak
Plantation which has a lower sales price. The increase in Vacation Ownership
Interests sold was a result of expanded sales and marketing programs, both in
central Florida and internationally, and sales of Vacation Ownership Interests
at the Hampton Vacation Resort--Oak Plantation which were included in sales for
1997 but not for 1996.

Interest income increased 24.8%, from $7.1 million to $8.9 million due to a
26.1% increase in the average principal amount of net customer mortgages
receivable from $83.8 million to $105.6 million (despite a decline in the
average interest rate on customer receivables from 14.2% to 13.9%). Also
included in interest income is the discount amortization on customer mortgages
receivable recognized during the comparable six month periods ended June 30,
1997 and June 30, 1996 of $1.5 million and $1.1 million, respectively, relating
to the repurchase of customer mortgages receivable. This discount resulted from
a 1995 transaction in which the Company reacquired customer mortgages
receivable (pursuant to a related clean-up call provision) 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) from an investment partnership. As of June 30, 1997, $4.0
million of total unamortized discount remained and is expected to be amortized
through 1999.

Resort revenue increased 13.0%, from $7.1 million to $8.1 million, as a
result of increased room rentals primarily from the impact of additional room
rentals at the Hampton Vacation Resort--Oak Plantation, which are included for
the six months ended in June 30, 1997, but not in the same period in 1996.
Telecommunication revenues (guest telephone charges relating to the existing
resorts and revenues from contracting services provided to third parties)
remained relatively constant against the comparable six month period ended June
30, 1996.

Total operating costs and expenses increased $10.7 million or 26.1% from
$40.9 million in the period ending June 30, 1996 to $51.6 million in the
comparable 1997 period, but declined as a percentage of total revenue from
88.2% in 1996 to 85.2% in 1997. Vacation Ownership Interest product costs, as a
percentage of Vacation Ownership Interest revenues, decreased from 25.1% in
1996 to 23.1% in 1997, as a result of sales in the current period of phases
with relatively lower per unit costs at the Vistana Resort--Orlando and the
Hampton Vacation Resort--Oak Plantation. Sales and marketing expenses increased
45.5% from $12.6 million in 1996 to $18.3 million in 1997 during the comparable
six month period principally due to the 40.0% increase in related Vacation
Ownership Interest sales and the Company's sales facilities expansion. As a
percentage of Vacation Ownership Interest sales, selling and marketing expenses
increased from 43.9% in the period ended June 30, 1996 to 45.6% in the period
ended June 30, 1997 as a result of higher marketing costs, as well as expenses
related to increased international sales, which carry higher sales and
marketing costs, and from the opening of new national and international sales
facilities.

Loan portfolio expenses consisting of interest expense-treasury decreased to
$3.1 million in 1997 from $3.3 million in 1996 primarily as a result of the
interest benefit obtained as a result of the debt repayment made from a portion
of the proceeds of the Initial Public Offering. Provision for doubtful accounts
remained relatively constant at 7.0% of Vacation Ownership Interest revenues in
1997 compared to 7.1% in 1996. The Company periodically 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.
Resort and telecommunication expenses increased at a rate commensurate with
that of related revenues.

General and administrative expenses increased from $3.4 million for the six
months ended June 30, 1996 to $5.0 million for the six months ended June 30,
1997, increasing as a percent of total revenues, from 7.3% in 1996 to 8.2% in
1997. The increase in general and administrative expenses was the result of (i)
increased revenue levels and commensurate business activities; (ii) the
addition of a number of senior managers and key executives in order to build
the management and organizational infrastructure necessary to efficiently
manage the Company's future growth; (iii) the Company's expenses as a public
company, including the filing of periodic public reports; and (iv) added
salary, travel and office expenses attributable to the current and planned
growth in the size of the Company. Depreciation and amortization remained
constant at 2.3% as a percentage of total revenues in both respective periods
reflecting the added costs of depreciation from capital additions being spread
over a larger revenue base. Interest expense-other decreased from 4.4% in 1996
as a percentage of total revenue to 1.8% in the same period of 1997 due to
early extinguishment of debt from funds provided by the Initial Public
Offering.

Operating income increased 64.1% to $8.9 million, or 14.8% of total revenues,
during the six months ended June 30, 1997 from $5.5 million, or 11.8% of total
revenues, during the six months ended June 30, 1996.

As the result of the Initial Public Offering and the Formation Transactions,
the Company became subject to federal, state and foreign income taxes and was
required to record a nonrecurring deferred tax liability of $13.2 million for
cumulative temporary differences between financial reporting and tax reporting.
For the six months ended June 30, 1997, the Company also recorded a deferred
income tax expense provision of $2.8 million, less $0.5 million relating to the
extraordinary item which was recorded net of tax. The deferred tax assets,
deferred tax liabilities and the current tax provision were estimated based on
management's most recent information as of June 30, 1997. The provision for
income taxes reflects the income tax expense from the date of the formation
through June 30, 1997.

The Company reports most of its sales of Vacation Ownership Interests on the
installment method for federal income tax purposes. As a result, the Company
does not recognize taxable income on these sales until the installment payments
have been received from the Company's customers. The Company became subject to
the federal alternative minimum tax ("AMT") as a result of the deferred income
which results from the installment sales method in the period ended June 30,
1997. In the quarter ended June 30, 1997, the Company began paying State of
Florida AMT and the Company expects to pay State of Florida AMT for the balance
of the fiscal year.

Under Section 453(l) of the Internal Revenue Code, interest may be imposed on
the amount of tax attributable to the installment payments on customer
receivables for the period beginning on the date of sale and ending on the date
the related tax is paid. If the Company is otherwise not subject to pay tax in
a particular year, no interest is imposed since the interest is based on the
amount of tax paid in that year. The Company has not included a provision for
any of this interest since it is not currently subject to tax. However, in the
future it may become so. The Company continues to monitor its tax provision and
may adjust it to provide for this interest in the future.

During the first quarter of 1997, the Company repaid $38.9 million of debt.
The Company recorded an expense relating to the write-off of previously
capitalized fees and prepayment penalties of $0.8 million, net of related tax
benefits of $0.5 million.

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 110.4%
increase in sales generated by the Company's internationally-based marketing
efforts which grew from $4.7 million in 1995 to $9.9 million in 1996.

Interest revenue increased 20.6% from $12.9 million to $15.5 million due to a
24.4% 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 33.7% 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, $5.5 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 Vacation Ownership Interest 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 the Hampton
Vacation Resort--Oak Plantation 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 entered into new employment agreements with its
senior executives effective upon completion of the Initial Public 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 from operations from the sales and financing of
Vacation Ownership Interests, resort operations, management activities and
telecommunication services. With respect to the sale of Vacation Ownership
Interests, the Company generates cash for operations from (i) customer down
payments and (ii) 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 13.9% at June 30, 1997) and the interest
paid on the notes payable secured by the Company's pledge of such customer
mortgages receivable (which averaged 10.5% at June 30, 1997). Cash provided by
operations for the six months ended June 30, 1997 and 1996 increased to $4.6
million from $2.3 million, primarily due to improved operating results in the
first six months of 1997.

Net cash used in investing activities for the six months ended June 30, 1997
and 1996 was $14.8 million and $8.1 million, respectively, principally due to
increased sales of Vacation Ownership Interests and the related increase in
customer mortgages receivable.

Net cash provided by financing activities was $13.2 million during the six
month period ended June 30, 1997 versus a net cash provided in 1996 of $6.1
million primarily due to the Company's issuance in the first quarter of 1997 of
4,625,000 shares of Common Stock in the Initial Public Offering resulting in
approximately $49.5 million of net proceeds. The net proceeds of the Initial
Public Offering were used by the Company to repay $38.9 million of outstanding
debt. The remaining $10.6 million is being used to fund expansion and to
provide the Company with working capital.

The Company's current credit facilities (the "Credit Facilities") provide for
term loans, of which $28.4 million were outstanding as of June 30, 1997, and
revolving lines of credit of which $56.2 million were outstanding as of June
30, 1997 against total available capacity at that date of $166.1 million. As of
June 30, 1997, the Company's term loans accrued interest at various rates
between 8.4% and 11.3% per annum, and the Company's revolving lines of credit
accrued interest at rates between 9.75% and 10.50% per annum. Approximately $72
million of the Company's indebtedness bears interest at variable rates based on
fixed spreads over a specified prime rate. The Company's indebtedness under the
Credit Facilities is secured primarily by pledges of the Company's receivables
(primarily its customer mortgages receivable), mortgages on certain of 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).

The Company requires funds, which it obtains from its current Credit
Facilities, 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. Of the
amounts outstanding under the Credit Facilities, as of June 30, 1997, the
Company had $27.6 million outstanding under its notes payable secured by its
land and Vacation Ownership Interest inventory, $52.3 million outstanding under
its notes payable secured by customer mortgages receivable and $4.7 million of
other secured and unsecured notes payable. As of June 30, 1997, the Company's
scheduled principal payments on its long-term indebtedness through 2001
(excluding payments on Credit Facilities secured primarily by customer
mortgages receivable and Vacation Ownership Interest inventory) were $1.0
million in 1997, $1.4 million in 1998, $1.4 million in 1999, $1.1 million in
2000 and $.7 million in 2001.

Subsequent to June 30, 1997, the Company entered into the following
additional credit facilities: (i) three customer mortgage receivable based
revolving credit facilities aggregating $55.0 million; and (ii) a $12.7 million
loan facility for the construction of the Embassy Vacation Resort--Myrtle Beach
and related amenities. As of September 30, 1997, these loans accrued interest
at various rates between 8.2% and 9.0%.

Also subsequent to June 30, 1997, the Company entered into a nonbinding
letter agreement with a major international bank for the establishment of $90
million in new credit facilities. These facilities include: (i) a $70.0 million
warehouse facility to finance customer purchases of Vacation Ownership
Interests, and (ii) an unsecured $20 million revolving credit facility for
general corporate purposes. The letter agreement also contemplates the eventual
securitization of customer mortgage receivables which collateralize the
warehouse lending facility. The warehouse lending facility would bear interest
at the London Inter-Bank Offering Rate ("LIBOR") plus 1.0% and the revolving
credit facility would bear interest at LIBOR plus 2.25%. The new credit
facilities are expected to include certain financial and operating covenants.
The lender's obligation to provide these credit facilities is subject to the
receipt of final credit approval, execution of mutually satisfactory legal
documentation and other customary conditions; accordingly, there can be no
assurance that the new credit facilities will be established or that if
established the terms will be as described above.

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 resorts or having vacation ownership
assets, management, sales or marketing expertise commensurate with the
Company's operations in the vacation ownership industry. The Company is also
currently considering the acquisition of several additional land parcels

for the development of additional resorts. The Company also evaluates
additional asset and operating company acquisitions, but presently has no
contracts or capital commitments relating to any such potential acquisitions.

Subsequent to June 30, 1997, the Company purchased from an affiliate of PGA
of America approximately 25 acres of land adjacent to an existing 36-hole golf
facility owned by another affiliate of PGA of America in Port St. Lucie,
Florida. The present plan is for the property to contain approximately 387
units, representing a total of 19,737 Vacation Ownership Interests. The
purchase price for this property was $3.75 million, and the Company financed
its purchase of the property through the payment of $1.5 million in cash from
its existing working capital and the issuance of a non-interest bearing note to
the seller in the principal amount of approximately $2.2 million.

In the future, the Company may negotiate additional credit facilities, issue
debt, or enter into customer mortgages receivable securitizations. 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 the Company 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 its current operations for the next 12 months. However, depending upon the
Company's growth opportunities and the conditions in the capital and other
financial markets, and other factors, the Company may from time to time
consider the issuance of debt, equity or other securities, the proceeds of
which may be used to finance acquisitions, to refinance debt or for general
corporate purposes.

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's 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. Success and
Points' revenues are moderately seasonal with owner and guest activity the
greatest from June 15 to Labor Day and Christmas to Easter. As the Company
expands into new markets and geographic locations it may experience new
seasonality dynamics creating fluctuations in operating results. See "Risk
Factors--Variability of Quarterly Results."

BUSINESS

Founded in 1980, the Company is a leading developer and operator of high
quality 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; and (iii) providing financing to its customers
for their purchase of Vacation Ownership Interests at the Company's vacation
ownership resorts. The Company's pro forma total revenues for the year ended
December 31, 1996 and the six months ended June 30, 1997 were approximately
$113 million and $74 million, respectively. See "--Summary Combined Historical
and Pro Forma Financial Information of the Company."

During its 17-year history, the Company has sold in excess of $600 million of
Vacation Ownership Interests and has developed an ownership base of over 60,000
Vacation Ownership Interest owners residing in more than 100 countries. The
Company was the first to open a vacation ownership resort in the Orlando,
Florida market, which has become one of the largest vacation ownership resort
markets in the world in terms of Vacation Ownership Interests sold. Raymond L.
Gellein, Jr., the Company's Chairman and Co-Chief Executive Officer, and
Jeffrey A. Adler, its President and Co-Chief Executive Officer, have been
employed by the Company since 1980 and 1983, respectively. Additionally,
Messrs. Gellein and Adler serve as the chairman of the Florida chapter of ARDA
and as a director of ARDA, respectively. Under their direction, the Company has
fostered a values-driven business culture that emphasizes excellence and
quality relationships with its employees, customers and business partners.

The quality and customer appeal of the Company's vacation ownership resorts
have been recognized through industry awards and by several leading travel
publications. At June 30, 1997, the Company's flagship resort, Vistana Resort
in Orlando, contained 1,116 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 existing Florida-
based resorts is rated as a Gold Crown resort by RCI, and the Villas of Cave
Creek and Falcon Point are rated as Five Star Resorts by II. Two of the
Company's resorts under development, Vistana Resort at World Golf Village and
the Embassy Vacation Resort--Myrtle Beach, have already achieved the Gold Crown
designation from RCI. In 1996, approximately 13% of the resorts reviewed by RCI
received a Gold Crown rating, the highest rating awarded by RCI, and
approximately 18% of the resorts reviewed by II received a Five Star rating,
the highest rating awarded by II.

As part of its operating strategy, the Company seeks to develop strategic
relationships with selected parties in order to broaden and enhance its
marketing and sales efforts and to provide additional vacation ownership resort
development opportunities. In furtherance of this strategy, as described below,
the Company has entered into (i) an exclusive joint venture agreement with
Promus, a leading hotel company in the United States; (ii) a long-term
affiliation agreement with a subsidiary of PGA of America; and (iii) a limited
partnership which has the exclusive right to develop and market Vacation
Ownership Interests at World Golf Village. The Company intends to continue to
develop and expand strategic alliances that will create opportunities to
develop unique, high quality vacation ownership resorts and broaden and enhance
its marketing and sales efforts.

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

LOGO
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. In addition, vacation ownership
resorts allow 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
represents 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 and II. 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

The Company's goal is to expand its position as a leading developer and
operator of vacation ownership resorts by (i) continuing sales of Vacation
Ownership Interests at the Company's existing resorts; (ii) developing and
selling additional vacation ownership resorts; (iii) improving operating
margins; and (iv) pursuing selected acquisition opportunities. To achieve this
goal, the Company intends to adhere to its core operating strategies of
obtaining extensive access to qualified buyers, promoting sales and marketing
excellence and delivering memorable vacation experiences to its owners and
guests.

inventory of Vacation Ownership Interests and to make available for sale,
based on consumer demand, additional Vacation Ownership Interests through
expansion at the Company's existing vacation ownership resorts. At June 30,
1997, the inventory of Vacation Ownership Interests at existing resorts was
14,773.

The Company intends to maintain its position as a leader in the Orlando
vacation ownership market (a popular vacation destination with over 36 million
visitors annually) by developing and selling an additional 423 units at
Vistana Resort, representing an additional 21,573 Vacation Ownership
Interests. In addition, the Company plans to continue sales at the Hampton
Vacation Resort--Oak Plantation, a 242-unit former apartment complex located
in the Orlando market, which the Company is converting in phases into a
vacation ownership resort. This property is owned by a partnership in which
the Company holds an approximately 67% controlling ownership interest. As of
June 30, 1997, the Hampton Vacation Resort--Oak Plantation had an unsold
inventory of approximately 11,735 Vacation Ownership Interests.

The Company added its resorts in Arizona and Colorado in September 1997 as a
result of the acquisition of Success and Points. It plans to continue sales of
existing inventory at these resorts and to expand them where possible. At the
Company's 58-unit Falcon Point Resort, located in Avon, Colorado, 409 Vacation
Ownership Interests remained for sale at June 30, 1997, with an additional 24
units (representing 1,224 Vacation Ownership Interests) planned for future
development. At the Company's 54-unit Eagle Point Resort, located in Vail,
Colorado, 54 Vacation Ownership Interests remained available for sale at June
30, 1997. At the Company's 25-unit Villas of Cave Creek Resort, located
outside of Scottsdale, Arizona, 849 Vacation Ownership Interests remained
available for sale with another 10 units (representing 510 Vacation Ownership
Interests) planned for future development.

Developing and Selling Additional Resorts. The Company intends to rely on
its operating knowledge and strategic alliances to develop additional vacation
ownership resorts, including the following projects currently in development:

Vistana Resort at World Golf Village. In the fall of 1996, the Company
commenced construction of the 102-unit first phase (representing 5,202
Vacation Ownership Interests), of a 408-unit vacation ownership resort at
World Golf Village. The first phase is expected to be completed in the
second quarter of 1998. 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,
championship golf courses, 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 right 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 partnership which the Company controls, but in
which it has a minority 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.

Embassy Vacation Resort--Myrtle Beach. In December 1996, the Company
acquired an initial 14 acres of unimproved land in Myrtle Beach, South
Carolina for the development of the Embassy Vacation Resort--Myrtle Beach.
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 commenced

construction of the 44-unit first phase of this resort (representing 2,244
annual Vacation Ownership Interests) during the third quarter of 1997 and
began pre-sales in May 1997. The first phase is expected to be completed in
the first quarter of 1998. The Company believes Myrtle Beach represents an
attractive, growing market for the expansion of its portfolio of vacation
ownership resorts. Similar to Orlando, Myrtle Beach has a large number of
visitors whose length of stay averages approximately five days. Consistent
with its key operating strategies, the Company has procured substantial
marketing affiliations with significant tourist venues in the Myrtle Beach
area.

PGA Vacation Resort by Vistana. The Company is the exclusive vacation
ownership resort development company of PGA of America. In September 1997,
the Company acquired 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. The property, located approximately 40 miles north of
Palm Beach Gardens, Florida, is planned to contain approximately 387 units
(representing a total of 19,737 Vacation Ownership Interests). The first
phase is expected to be completed during the fourth quarter of 1998. The
Company believes that PGA of America, through its approximately 20,000 golf
professionals and the Company's license to use PGA of America's name,
initials, trademark and logo, will provide strategic marketing
opportunities for the Port St. Lucie vacation ownership resort and any
future PGA Vacation Resorts developed by the Company. In addition, in
September 1997, the Company and PGA of America executed a long-term
affiliation agreement which provides for the development of future vacation
ownership resorts and marketing and golf access agreements for the Port St.
Lucie, Florida property. 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."

Embassy Vacation Resort--Scottsdale. Embassy Vacation Resort--Scottsdale
will consist of an estimated 150 units, representing 7,650 Vacation
Ownership Interests, and will be constructed by the Company on
approximately 10 acres of land which the Company intends to acquire prior
to December 1997 pursuant to an existing contract entered into by Success
and Points. The Company anticipates that it will commence construction of
the 150 units during the first half of 1998.

Promus Relationship. In December 1996, the Company and Promus entered
into an exclusive five-year agreement to jointly acquire, develop, market
and operate vacation ownership resorts, in North America. 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, 1996, Promus Hotel Corporation had over 10,000
employees system-wide and owns, manages and/or franchises more than 900
hotels, containing over 115,000 rooms and suites.

Promus has agreed that the Company will be the sole franchisee in North
America of the Hampton Vacation Resort and the 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. The Company currently operates the Hampton Vacation Resort--Oak
Plantation, is developing the Embassy Vacation Resort--Myrtle Beach and
intends to develop a vacation ownership resort in Scottsdale, Arizona under
the Embassy Vacation Resort brand name, in each case under a franchise
arrangement. The Company and Promus have agreed on six markets in which the
Company and Promus will focus their joint venture efforts. These six
markets consist of three coastal areas of Florida, including Miami, Naples
and Panhandle; the coastal region between Jacksonville, Florida and Myrtle
Beach, South Carolina; Scottsdale, Arizona; and Palm Springs, California.
The Company intends to develop additional vacation ownership resorts under
the Hampton Vacation Resort and the Embassy Vacation Resort brand

names in the future and may exercise its right to develop vacation
ownership resorts under the Homewood Vacation Resort name, either jointly
or as franchise. The Company and Promus are evaluating locations for the
joint development of vacation ownership resorts; however, at this time no
commitments exist for any joint venture resorts. See "Business--Affiliation
with Promus."

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 the 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,
the Hampton Inn and the Homewood Suites hotel brands, respectively. See "--
Affiliation with Promus."

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. In furtherance of this intention, the Company has
recently entered into new project financing and receivables financing at
more favorable rates than those historically enjoyed and is negotiating new
credit facilities which, if established, will be on terms that management
believes are favorable. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources."

Pursuing Selected Acquisition Opportunities. The Company from time to
time seeks opportunities to acquire vacation ownership assets and operating
companies that may be successfully integrated into the Company's existing
operations and enhance the Company's sales, marketing and resort ownership.
However, the Company currently has no contracts or capital commitments
relating to any other such acquisitions.

In utilizing this strategy, on September 16, 1997, the Company completed
the Acquisition of Success and Points. The Company acquired the stock of
Success and Points for a purchase price of approximately $24.0 million in
cash and 638,444 shares of Common Stock of the Company. Payout of 430,814
of such shares is contingent upon Success and Points achieving certain
operating criteria for calendar years 1998 through 2000. Success and Points
own and operate one vacation ownership resort in Arizona (the Villas of
Cave Creek near Scottsdale, Arizona) and two vacation ownership resorts in
Colorado (Eagle Point Resort in Vail, Colorado and Falcon Point Resort in
Avon, Colorado) and serves as the exclusive sales and marketing agent for a
fourth resort. As a result of the Acquisition, the Company has a contract
to purchase undeveloped land in Scottsdale, Arizona on which the Company
intends to develop Embassy Vacation Resort--Scottsdale.

The Company believes Success and Points will serve as a strong foundation
for sales, marketing and resort operations in the western region of the
U.S. and provide the Company with experience in direct marketing to
consumers in Arizona and Colorado. As a result of the strategic
relationships and operational expertise gained in this Acquisition, the
Company believes it will be better able to identify additional developments
and acquisitions in Arizona, Colorado and other western states.

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 June 30, 1997, the Company had
a portfolio of approximately 21,400 loans to customers totaling
approximately $125.2 million, with an average contractual yield of 13.9%
per annum (compared to the Company's weighted average cost of funds of
10.5% per annum). As of June 30, 1997 (i) approximately 3.1% of the
Company's customer mortgages receivable were 60 to 120 days past due; and
(ii) approximately 5.3% 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 $10.0 million. During the 6 months
ended June 30, 1997, the Company charged approximately $3.0 million against
such reserve (net of recoveries of related Vacation Ownership Interests).

The Company 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 the responsibility and authority for the
day-to-day operation of these resorts. In addition, the Company provides
telecommunications design and installation services for third parties on a
limited basis.

This Prospectus relates only to the sale of Common Stock offered hereby.
Shareholders of the Company are not entitled to any rights with respect to
any of the Company's resorts solely as a result of their ownership of
Common Stock.

THE RESORTS

The following table sets forth certain information as of June 30, 1997 and
for the six months then ended regarding each of the Company's existing
vacation ownership resorts, resorts under construction and planned resorts
(including existing and planned resorts acquired in the Acquisition),
including location, the year 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 during the six months ended June 30, 1997, the average sales price of
Vacation Ownership Interests sold in 1997 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, among other things, future land use,
project development, site layout considerations and customer demand. In
addition, the Company's construction and development of new vacation ownership
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."

- --------
(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 units per year for each of its units, with one
week reserved for maintenance of the unit (although historically sales at
Eagle Point, Falcon Point and Villas of Cave Creek have been based on 52
weeks per units per year). Accordingly, the Company is generally 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 1997, 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 numbers are based on sales of Vacation Ownership Interests on an
annual basis only and assume the sale of 51 weeks per year. To the extent
that alternate-year Vacation Ownership Interests or 52 weeks per year are
sold, the actual number of unsold 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 Vistana Resort at June 30, 1997 includes (i) 1,116
current existing units and (ii) 423 additional planned units (representing
an additional 21,573 unsold annual Vacation Ownership Interests).
Construction of 59 additional units was completed in 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 364 additional units is intended to be
commenced from time to time as conditions merit. Figures with respect to
this resort 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 1,010 alternate-year Vacation Ownership Interests with an average
sales price of $7,529 and 2,449 annual Vacation Ownership Interests with
an average sales price of $11,385.
(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 29 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) Hampton Vacation Resort--Oak Plantation 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 June 30, 1997, the conversion of 156 units (representing 7,956
annual Vacation Ownership Interests) had been completed. The Company
intends to convert the remaining 86 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. Hampton Vacation
Resort--Oak Plantation is operated on a franchise basis as the first
Hampton Vacation Resort pursuant to the Promus Agreement.
(g) Eagle Point Resort consists of 54 existing units, representing 2,808
Vacation Ownership Interests. This resort was acquired by the Company
pursuant to the Acquisition in September 1997, and is owned and operated
by the Company. All Vacation Ownership Interest sales reflected occurred
prior to the Acquisition.
(h) Falcon Point Resort consists of 58 existing units, representing 3,016
Vacation Ownership Interests and 24 additional planned units (representing
an additional 1,224 unsold annual Vacation Ownership Interests). This
resort was acquired by the Company pursuant to the Acquisition in
September 1997, and is owned and operated by the Company. All Vacation
Ownership Interest sales reflected occurred prior to the Acquisition.
(i) Villas of Cave Creek consists of 25 existing units, representing 1,300
Vacation Ownership Interests and 10 additional planned units (representing
an additional 510 unsold annual Vacation Ownership Interests). This resort
was acquired by the Company pursuant to the Acquisition in September 1997,
and is owned and operated by the Company. All Vacation Ownership Interest
sales reflected occurred prior to the Acquisition.
(j) In December 1996, the Company acquired the initial 14 acres of unimproved
land in Myrtle Beach, South Carolina for the development of the Embassy
Vacation Resort--Myrtle Beach. The Company also has an option until
December 31, 2003 to acquire up to 26 additional acres of contiguous
property for phased expansion of this resort. The Company commenced
construction of the 44-unit first phase of this resort (representing 2,244
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
506 units at this resort (assuming acquisition of the remaining 26 acres)
will be commenced from time to time as conditions merit. Myrtle Beach will
be operated as an Embassy Vacation Resort franchise pursuant to the terms
of the Promus Agreement.
(k) 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.
(l) PGA Vacation Resort by Vistana will consist of an estimated 387 units,
representing an estimated 19,737 annual Vacation Ownership Interests, and
will be constructed by the Company on 25 acres of land which the Company
acquired in September 1997. The Company anticipates that it will commence
construction of the 40-unit first phase of this resort (representing 2,040
annual Vacation Ownership Interests) during the fourth quarter of 1997.
Because the Company constructs additional units at its resorts based on
general market conditions and other factors, construction of the remaining
347 units at this resort are expected to be commenced from time to time as
conditions merit.
(m) The Embassy Vacation Resort--Scottsdale will consist of an estimated 150
units, representing 7,650 Vacation Ownership Interests, and will be
constructed by the Company on approximately 10 acres of land which the
Company intends to acquire prior to December 1997 pursuant to an existing
contract entered into by Success and Points. The Company anticipates that
it will commence construction during the first half of 1998. The
Scottsdale property will be operated as an Embassy Vacation Resort
franchise pursuant to 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
Hampton Vacation Resort--Oak
Plantation(d).................... $ 6,050 - $ 8,750 $3,700 - $ 5,300
Eagle Point Resort(d)............. $ 7,995 - $14,995 $5,995 - $ 9,495
Falcon Point Resort(b)............ $ 8,995 - $23,995 $6,495 - $13,995
Villas of Cave Creek(c)........... $12,995 - $12,995 $8,495 - $ 8,495
Embassy Vacation Resort--Myrtle
Beach(e)......................... $ 5,500 - $13,250 $3,300 - $ 7,950
Vistana Resort at World Golf
Village(e)....................... $ 7,500 - $16,000 (f)
PGA Vacation Resort by
Vistana(e)....................... $ 6,000 - $12,000 (f)
Embassy Vacation Resort--
Scottsdale(e).................... $ 7,000 - $15,000 $4,200 - $ 9,000

- --------
(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.
(c) Includes two-bedroom unit Vacation Ownership Interests only.
(d) Includes one- and two-bedroom unit Vacation Ownership Interests.
(e) Resort not yet in operation. Selling prices listed reflect the actual range
of pre-construction prices at Embassy Vacation Resort--Myrtle Beach and the
anticipated range of selling prices at Embassy Vacation Resort--Scottsdale.
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. Through September 30, 1997,
the Company has constructed seven 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; (vi) the Lakes Villas (1995),
consisting of 184 units; and (vii) the Cascades Villas (1997), consisting of 59
units with an additional 95 units currently under construction and an
additional 269 units planned.

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.
Accommodations at Vistana Resort as of September 30, 1997 consisted of 1,141
two-bedroom units and 34 one-bedroom units, divided into eight villages--
Courts, Falls, Spas, Palms, Springs, Fountains, Lakes and Cascades. 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.

The Hampton Vacation Resort--Oak Plantation (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. The Hampton
Vacation Resort--Oak Plantation has received the Gold Crown designation from
RCI. Pursuant to the Promus Agreement, the Company operates the resort on a
franchise basis as the first Hampton Vacation Resort.

Falcon Point Resort--(Avon, Colorado). Falcon Point is a 58-unit condominium
resort located in Avon, Colorado at the foot of Beaver Creek Ski Area in Vail
Valley. Amenities include, without limitation, a clubhouse, a heated swimming
pool, indoor and outdoor hot tubs, sauna, ski lockers and a coin operated
laundry. This resort contains studio, as well as one- and two-bedroom units.
All Falcon Point units, except studios, contain a fully-equipped kitchen.
Commencing in the first quarter of 1998, the Company intends to develop an
additional 24-units on a parcel of land adjacent to Falcon Point Resort.
Presales for this development may begin in the fourth quarter of 1998.

Villas of Cave Creek--(Cave Creek, Arizona). The Villas of Cave Creek is
comprised of 25, two-story villas located at the base of Black Mountain in the
Sonoran Desert foothills, which is just north of Scottsdale. Amenities include,
without limitation, two swimming pools, a clubhouse, an exercise room, a lawn
game area and a playground. All of the villas have a master suite, a fully-
equipped kitchen, dining room, living room, a second bedroom and two full
baths. The Company intends to develop an additional 10-units at Cave Creek
representing an additional 510 Vacation Ownership Interests.

Eagle Point Resort (Vail, Colorado). Eagle Point Resort is a 54-unit,
courtyard resort which is bordered by Gore Creek and located in Vail, Colorado.
Amenities include, without limitation, a heated swimming pool, indoor and
outdoor hot tubs, a sauna and a coin-operated laundry. Additionally, Eagle
Point Resort offers a complimentary shuttle service to the Lionshead Gondola
during the ski season. Eagle Point is equipped with one- and two-bedroom units,
each of which include a fully-equipped kitchen.

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
Foundation, 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 Foundation, 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 September 1997,
the Company purchased from an affiliate of PGA of America approximately 25
acres of land adjacent to The Reserve Community in Port St. Lucie, Florida for
the purpose of developing, marketing and operating a vacation ownership resort
at The Reserve Community in Port St. Lucie, Florida. The resort will be
developed as a PGA Vacation Resort by Vistana and 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 to 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, pursuant to a
golf access agreement, 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 387 units constructed in phases. The Company anticipates
commencing sales in 1998.

Embassy Vacation Resort--Myrtle Beach (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 is
constructing the first 44-unit phase of a planned 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 will operate the resort on a franchise basis as an

Embassy Vacation Resort. The Company commenced pre-construction sales in May
1997 and expects to complete construction of the first phase of the resort in
the first quarter of 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, Embassy Vacation Resort--Myrtle Beach 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.

Embassy Vacation Resort--Scottsdale (Scottsdale, Arizona). The Embassy
Vacation Resort--Scottsdale will be built on a 10-acre site near the TPC
Scottsdale golf course. Construction on the property is scheduled to begin
during the first half of 1998. Amenities include, without limitation, a 12,000
square-foot clubhouse and reception building, a recreation complex, a free-form
swimming pool, a children's club and a fully-equipped fitness center. All of
the villas have two-bedrooms, two baths, a fully-equipped kitchen, dining room,
living room, and an in-room washer and dryer.

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.
Promus Hotel Corporation has over 10,000 employees system-wide and owns,
manages and/or franchises more than 900 hotels, containing over 115,000 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 the
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 the six selected markets agreed to by the parties), and to
develop vacation ownership resorts with unique, non-multi-hotel brand hotel
properties. These six markets consist of three coastal areas of Florida,
including Miami, Naples and the Panhandle; the coastal region between
Jacksonville, Florida and Myrtle Beach, South Carolina; Scottsdale, Arizona;
and Palm Springs, California.

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 into 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 for which the Company will receive a fee based on a percentage of
sales and rental revenues. Additionally, the Company and Promus have agreed to
enter into a license agreement and hospitality management agreement, pursuant
to which Promus will license the applicable brand name and provide other
hospitality-related services at the resort and for which Promus will receive a
fee based on a percentage of sales and rental revenues. The Promus Agreement
provides that both parties must first offer vacation ownership resort
development opportunities in the six selected markets of 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 amount of expenditures which the Company may be required to incur and the
amount of obligations which the Company may be required to satisfy will depend
upon, among other things, the extent to which the applicable franchise
agreement requires the Company to incur construction and development costs,
operating expenses and capital expenditures and maintenance costs. 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 (which was signed in December 1996).

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, pursuant to the Promus
Agreement, the parties have franchised two of the Companies properties: (i)
Hampton Vacation Resort--Oak Plantation which is the first vacation ownership
resort to operate under the Hampton Vacation Resorts brand and (ii) the
Embassy Vacation Resort--Myrtle Beach, currently under construction in South
Carolina. In addition, the parties have agreed to franchise the property being
acquired in Scottsdale as an Embassy Vacation Resort.

AFFILIATION WITH PGA OF AMERICA

The Company and an affiliate of PGA of America have entered into an
affiliation agreement (the "Affiliation Agreement"), a ten-year agreement
pursuant to which the Company has the exclusive right to acquire, develop,
manage, market and sell vacation ownership resorts in St. Lucie County,
Florida and potentially in other, yet to be determined, areas under the PGA
name, initials, trademark and logo. PGA Vacation Resort by Vistana is the
first resort that will be developed pursuant to the Affiliation Agreement. See
"--Description of the Company's Resorts."

Under the Affiliation Agreement, the Company has the right of first offer to
be the developer of additional PGA vacation resorts at other potential
properties (outside St. Lucie County, Florida) identified by the Company or by
PGA of America or its affiliates. If the parties mutually agree to develop any
other property, the Company will have the exclusive rights and licenses to use
the PGA name, initials, trademark and logos in connection with such property.
In the event that either party elects not to pursue development of another
potential resort, the other party has certain rights to develop that resort
independently. Except for Port St. Lucie, there are no current commitments for
development of any other vacation ownership resorts, and there can be no
assurance that the parties will successfully negotiate and execute any future
development agreements. If the Company and PGA of America enter into future
development agreements, the Affiliation Agreement contemplates that the
parties will execute similar agreements and covenants as those regarding the
PGA Vacation Resort by Vistana.

The Company's exclusive right to develop the PGA Vacation Resort by Vistana,
and its right of first offer for other potential vacation ownership resorts,
does not apply to development projects outside St. Lucie County, Florida which
already bear the PGA name. Likewise, the Affiliation Agreement does not limit,
prohibit or restrict the Company or any of its affiliates from conducting its
business in any manner it determines to be necessary or advantageous to it,
including, without limitation, developing, marketing, managing, owning,
operating or selling vacation ownership resorts other than the PGA Vacation
Resort by Vistana or other properties that may be developed by the parties.

The Company has the right under the Affiliation Agreement, but not the
obligation, to include one or more of the PGA Vacation Resorts in a vacation
club or other exchange program in combination with other vacation resorts of
comparable or superior quality owned or operated by the Company or one of its
affiliates, subject to PGA of America's approval.

In addition, the Company and PGA of America entered into a marketing
agreement under which the Company is granted access to the PGA mailing list
(which includes over 72,000 names of PGA members, apprentices and business
contacts) as well as media recognition in publications such as the PGA News,
the PGA International Golf Show Directory and listing on the PGA website.
Pursuant to the Port St. Lucie golf access agreement and the marketing
agreement, the Company has agreed to pay PGA of America aggregate royalties in
the amount of 10% of net sales and 2% of gross rental revenues. See "--
Description of the Company's Resorts."

THE ACQUISITION.

On September 16, 1997, the Company completed its acquisition of entities
comprising The Success Companies, Success Developments, L.L.C. and Points of
Colorado, Inc. from Donald J. Dubin, Larry D. Doll, Ronald R. Sharp, David E.
Bruce and David E. Friedman (collectively, the "Sellers"). Pursuant to the
Agreement and Plan of Reorganization dated as of August 15, 1997, (the
"Agreement and Plan of Reorganization"), by and among the Company, Vistana
West, Inc. (formerly known as V Sub-1, Inc.), a wholly-owned subsidiary of the
Company, and all of the Sellers, the Company acquired all of the outstanding
stock of Success and Points for a purchase price consisting of approximately
$24 million in cash (financed with bank borrowings of approximately $24
million) and 638,444 shares of Common Stock. Payout of 430,814 of such shares
is contingent upon Success and Points achieving certain operating results for
calendar years 1998 through 2000. The consideration was determined as a result
of arm's-length negotiations between the Company and the Sellers.

In connection with the closing of the transactions contemplated by the
Agreement and Plan of Reorganization, the Company also granted certain
registration rights to the Sellers. See "Shares Eligible for Future Sale." In
addition, a wholly-owned subsidiary of the Company entered into employment
agreements with each of the Sellers pursuant to which each of them serves as an
officer of such subsidiary.

Prior to their acquisition by the Company, Success and Points were a closely-
held group of companies which developed, marketed, financed and operated three
vacation ownership resorts: (i) the Villas of Cave Creek, near Scottsdale,
Arizona; (ii) Eagle Point Resort in Vail, Colorado; and (iii) Falcon Point
Resort in Avon, Colorado. The Company will continue to market, finance and
operate these resorts. In addition, Success and Points served, and the Company
will continue serving, as the exclusive marketing and sales agent for the
largest vacation ownership resort in Colorado, The Christie Lodge, located in
Avon. Success and Points also had additional property in Colorado and Arizona
under contract for future development, which property the Company intends to
develop.

The Company believes Success and Points will serve as a strong foundation for
sales, marketing and resort operations in the western region of the United
States and provide the Company with experience in direct marketing to consumers
in Arizona and Colorado. As a result of the strategic relationships and
operational expertise gained in this Acquisition, the Company believes it will
be better able to identify additional developments and acquisitions in Arizona,
Colorado and other western states.

SALES AND MARKETING

General. During its 17-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 market segments such as
the golf industry. 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. Through June
30, 1997, approximately 32% of the Company's sales have been to foreign
purchasers (with approximately 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 65% for the six months ended June
30, 1997 as compared to the six months ended June 30, 1996. 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 17-
year history. Prospective purchasers are given a personalized on-site tour of
the Company's resorts 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, except for certain
independent contractors, 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 220 sales representatives and utilizes the
services of approximately 60 independent contractors as sales agents. 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 June 30, 1997, the Company's existing credit
facilities provided for an aggregate of up to approximately $118.6 million of
available customer mortgages receivable financing to the Company bearing
interest at variable rates based on a specified prime rate. As of June 30,
1997, the Company had approximately $52.3 million of indebtedness outstanding
under its existing customer mortgages receivable credit facilities at a
weighted average interest rate of 10.5% per annum secured by the Company's
pledge of a portion of its customer mortgages receivable. As of June 30, 1997,
the Company had a portfolio of approximately 21,400 loans to customers
totalling approximately $125.2 million, with an average contractual yield of
13.9% per annum. As of June 30, 1997 (i) approximately 3.1% of the Company's
customer mortgages receivable were 60 to 120 days past due; and
(ii) approximately 5.3% of the Company's customer mortgages receivable were
more than 120 days past due and the subject of legal proceedings. The
Company's provision for doubtful accounts is 7.0% of Vacation Ownership
Interest revenues. The Company periodically 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 allowance for
loss on receivables through its provision for doubtful accounts on an annual
basis. Management believes that the provision is adequate for such future
losses. 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, generally 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, directly or indirectly, 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 is equal to approximately 10% of aggregate gross
assessment fees payable by the owners of the Vacation Ownership Interests. The
Company is responsible for, and has 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 or more years, with automatic
renewals. The homeowners' associations may remove the Company as manager upon
obtaining the requisite owner vote. The Company also provides, directly or
indirectly, 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, and II. 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 or II allow 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. The exchange network 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 or II is unable to meet the member's initial request, the network
operator suggests alternative resorts based on availability.

The cost of an 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 (Vistana
Resort, Vistana's Beach Club and the Hampton Vacation Resort--Oak Plantation)
in the RCI system, and II has assigned its highest rating to two of the
Company's operating resorts (Falcon Point and Villas of Cave Creek) in the II
system.

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 focused on the vacation ownership industry, such as
Signature, Fairfield, Vacation Break, Silverleaf and Trendwest have competed,
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
other markets in which the Company currently operates or is developing
vacation ownership resorts. Certain entities with which the Company competes
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.
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 Arizona and
Florida, 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, prize, 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 conducted Phase I environmental assessments at each of its
existing resorts, properties under development 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 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 September 30, 1997, the Company had approximately 1,751 full-time
employees and utilized the services of approximately 60 independent contractors
as sales agents. The Company believes that its employee relations and relations
with its independent contractors 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. Positions with the
Company include positions with the Company's predecessors.

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

Raymond L. Gellein, 50 Chairman of the Board, Co-Chief Executive Officer
Jr..................... and Director
Jeffrey A. Adler........ 45 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 Director
Charles E. Harris....... 51 Director
Steven J. Heyer......... 45 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 of the Company since December 1996.
She also serves as President of Vistana East, Inc. in charge of overseeing the
entire sales and marketing responsibility for the Company's east coast
operations. 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 served as a Director of the Company since March 1997.
Mr. Geller serves as President and Chief Executive Officer of Strategic Hotel
Capital Incorporated, a lodging real estate ownership company. Previously, he
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 served as a Director of the Company since March 1997.
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 served as a Director of the Company since March 1997.
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

Audit Committee. The Board of Directors has established an audit committee
(the "Audit Committee"), which consists of Messrs. Geller, Harris and Heyer.
The Audit Committee makes recommendations concerning the engagement of
independent public accountants, reviews with the independent public
accountants the plans and results of the audit engagement, approves
professional services provided by the independent public accountants, reviews
the independence of the independent public accountants, considers the range of
audit and non-audit fees, and reviews the adequacy of the Company's internal
accounting controls.

Compensation Committee. The Board of Directors has established a
compensation committee (the "Compensation Committee"), which consists of
Messrs. Geller and Heyer, to determine compensation for the Company's senior
executive officers, determine awards under the Stock Plan, and administer the
Employee Stock Purchase Plan (as defined herein).

Nominating Committee. The Board of Directors has established nominating
committee (the "Nominating Committee"), which consists of Messrs. Gellein and
Adler. The function of the Nominating Committee is 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.

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 have been
classified as the class of directors having a term expiring at the 1998 annual
meeting of shareholders, Mr. Gellein has been classified as the class of
directors having a term expiring on the date of the 1999 annual meeting of
shareholders, and Messrs. Adler and Harris have been classified as 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

Each 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") has been granted options to purchase 45,000 shares of Common Stock
at an exercise price equal to $12 per share. Of such options, options to
purchase 15,000 shares of Common Stock became 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 is paid an annual fee of $18,000,
payable in equal quarterly installments.

DIRECTORS' AND OFFICERS' INSURANCE

The Company has purchased a directors' and officers' liability insurance
policy with coverage typical for a public company similar to the Company. 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 has purchased 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 Co-Chief
Executive Officers and each of the other three 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 and Chief
Operating Officer
Susan Werth (6)......... 1996 $ 149,712 -- 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 Principal Shareholders to Mr. Avril, Ms. Werth
and Ms. Lytle, respectively. See "Principal 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 has entered into employment agreements with each of Messrs.
Gellein, Adler and Avril, Ms. Werth and Ms. Lytle which provide, among other
things, that, the annual base salaries of Messrs. Gellein, Adler and Avril,
Ms. Werth and Ms. Lytle are $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, have a ten-
year term and, shall become 25% vested after 12 months from the date of
grant and shall vest pro rata in arrears on a monthly basis over a period
of 36 months thereafter. 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 pro rata in arrears on a
monthly basis over a period of 36 months 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 has been granted NSOs to purchase 45,000 shares of Common Stock for
an exercise price per share equal to $12 per share. Of such NSOs, NSOs to
purchase 15,000 shares of Common Stock became 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. There are 1,900,000 shares of Common Stock reserved for
issuance pursuant to the Stock Plan. The Company has issued to executive
officers, other key employees, Eligible Directors and consultants of the
Company options to purchase 1,854,000 shares of Common Stock pursuant to the
Stock Plan. In addition, the Company currently intends to seek Board of
Director and shareholder approval at the next Annual Meeting of Shareholders
to increase the number of shares of Common Stock reserved for issuance
pursuant to the Stock Plan.

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 have been reserved for
issuance under the Employee Stock Purchase Plan. The Employee Stock Purchase
Plan will be administered by the Compensation Committee.

OPTIONS GRANTED BY PRINCIPAL SHAREHOLDERS

The Principal Shareholders, pro rata in accordance with the ownership of
Common Stock, have granted 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 $12 per share. These options became
exercisable in full at the date of grant and will terminate ten years after
the date of grant, subject to certain exceptions. See "Principal 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 Initial Public Offering, the Company entered
into employment agreements with each of Messrs. Gellein, Adler, Avril and
Sabin, Ms. Werth and Ms. Lytle for a term commencing on the completion of the
Initial Public Offering and ending on the fourth anniversary of the Initial
Public 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 are 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 are 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 is 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 is 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 is 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).

The Company has granted each of Messrs. Gellein and Adler options to
purchase 50,000 shares of Common Stock at an exercise price of $12 per share
pursuant to the Stock Plan. 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 granted Mr. Sabin options to purchase 75,000 shares of Common
Stock at an exercise price equal to $12 per share pursuant to the Stock Plan.
See "--Executive Compensation."

Under the terms of the employment agreements, Messrs. Gellein, Adler, Avril
and Sabin, Ms. Werth and Ms. Lytle are prohibited from disclosing any
confidential information or trade secrets of the Company. Messrs. Gellein,
Adler, Avril and Sabin, Ms. Werth and Ms. Lytle are 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, a director of the Company, 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 Principal 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. In 1997, the
Company paid fees of $280,000 to Synagen in connection with the Initial Public
Offering.

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.
Ewing was one of the underwriters in the Initial Public Offering, and the
Representatives (as defined herein) have agreed to include Ewing as one of the
Underwriters in the Offering. See "Underwriting."

The Principal Shareholders, after giving effect to the Offering, will be the
owners of 53.4% of the Common Stock (approximately 52.1% if the Underwriters'
over-allotment option is exercised in full). The Principal Shareholders are
currently parties to a Shareholders' Agreement (the "Shareholders'
Agreement"). Pursuant to the Shareholders' Agreement, the Principal
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 Principal Shareholders to terminate the Shareholders' Agreement; (ii)
the tenth anniversary of the Initial Public Offering; and (iii) the date upon
which one of the Principal Shareholders (treating all shares of Common Stock
beneficially owned by Mr. Gellein as held by one Principal Shareholder and all
shares of Common Stock beneficially owned by Mr. Adler as held by one
Principal Shareholder) fails to own 5% of the Common Stock. See "Risk
Factors--Effective Control by Principal Shareholders; 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 Principal Shareholders.
See "Principal Shareholders" and "Shares Eligible for Future Sale."

The Company was incorporated in the State of Florida in December 1996 to
effect the Formation Transactions and the Initial Public Offering. Prior to
the Initial Public Offering, the business of the Company was conducted through
(i) several corporations and limited partnerships (collectively, the
"Affiliated Companies") which were directly or indirectly wholly-owned and
controlled by the Principal Shareholders, and (ii) two partnerships between
one or more of the Affiliated Companies and unaffiliated third party partners
(collectively, the "Related Partnerships"). The Affiliated Companies consisted
of over 20 corporations and three limited partnerships, the ownership of each
of which was 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 was
controlled solely by one or more of the Affiliated Companies.

Concurrently with, and conditioned upon, the completion of the Initial
Public Offering, each of the Principal Shareholders transferred to the Company
all of the outstanding capital stock and partnership interests owned by each
such Principal 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 issued an aggregate of 14,174,980 shares of Common
Stock to the Principal Shareholders, certain shares of which were sold by the
Principal Shareholders in the Initial Public Offering. As a result of the
Formation Transactions, the ownership of all of the interests in the
Affiliated Companies and Related Partnerships previously held by the Principal
Shareholders is owned by the Company or one of its subsidiaries.

Pursuant to the Formation Transactions, during the three months ended March
31, 1997, the Affiliated Companies made distributions to the Principal
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 had previously paid income
tax.

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 arm's length transactions with unaffiliated
third parties.

PRINCIPAL SHAREHOLDERS

The following table sets forth information as of September 30, 1997
regarding the beneficial ownership of the Common Stock of the Company 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; and (iii) all directors and executive
officers of the Company as a group.

NUMBER OF SHARES
NAME(1) BENEFICIALLY OWNED(2) PERCENTAGE
------- --------------------- ----------

Raymond L. Gellein, Jr.(3)................... 6,208,750 32.7%
Jeffrey A. Adler(4).......................... 6,085,750 32.0%
Laurence S. Geller(5)........................ 15,000 *
Charles E. Harris(6)......................... 30,100 *
Steven J. Heyer(7)........................... 25,000 *
Matthew E. Avril(8).......................... 400,000 2.1%
Susan Werth(9)............................... 125,000 *
Carol Lytle(10).............................. 400,000 2.1%
All directors and executive officers as a
group (9 persons)(11)....................... 13,314,600 70%

- --------
* 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) Includes (i) 3,439,720 shares 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) 2,769,030
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. Of such
shares of Common Stock, an aggregate of 675,000 shares of Common Stock
are subject to options granted to certain executive officers and other
employees of the Company. See notes (8), (9), (10) and (11) below.
Excludes options to acquire 50,000 shares of Common Stock granted by the
Company in February 1997 pursuant to the Stock Plan which are not
exercisable within 60 days of the date of this Prospectus.
(4) 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) 5,975,750 shares 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. Of such shares of Common Stock, 675,000 shares of Common Stock
are subject to options granted to certain executive officers and other
employees of the Company. See notes (8), (9), (10) and (11) below.
Excludes an aggregate of 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. Also excludes options to acquire 50,000 shares of
Common Stock granted by the Company in February 1997 pursuant to the
Stock Plan which are not exercisable within 60 days of the date of this
Prospectus.

(5) Includes 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 and 25,000 shares of Common Stock held by a trust for which
Mr. Geller does not serve as a trustee and of which he is not a
beneficiary.
(6) Includes 15,000 shares of Common Stock which may be acquired upon
exercise of options granted under the Stock Plan and 600 shares of Common
Stock owned by Mr. Harris' children. Excludes 30,000 shares of Common
Stock issuable pursuant to options granted under the Stock Plan which are
not exercisable within 60 days of this Prospectus.
(7) Includes 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.
(8) Represents 400,000 shares of Common Stock which may be acquired upon
exercise of options granted by the Principal Shareholders, which options
were granted in February 1997 at an exercise price equal to $12 per
share, the price to public in the Initial Public Offering. Excludes
options to acquire 180,000 shares of Common Stock granted by the Company
in December 1996 pursuant to the Stock Plan, under which 45,000 shares
may be acquired subsequent to December 26, 1997 and the remainder of
which is not exercisable within 60 days of the date of this Prospectus.
(9) Represents 125,000 shares of Common Stock which may be acquired upon
exercise of options granted by the Principal Shareholders, which options
were granted in February 1997 at an exercise price equal to $12 per
share, the price to public in the Initial Public Offering. Excludes
options to acquire 75,000 shares of Common Stock granted by the Company
in December 1996 pursuant to the Stock Plan, under which 18,750 shares
may be acquired subsequent to December 26, 1997 and the remainder of
which is not exercisable within 60 days of the date of this Prospectus.
Also excludes 1,000 shares of Common Stock owned by Ms. Werth's spouse,
for which Ms. Werth disclaims beneficial ownership.
(10) Represents 400,000 shares of Common Stock which may be acquired upon
exercise of options granted by the Principal Shareholders, which options
were granted in February 1997 at an exercise price equal to $12 per
share, the price to public in the Initial Public Offering. Excludes
options to acquire 180,000 shares of Common Stock granted by the Company
in December 1996 pursuant to the Stock Plan, under which 45,000 shares
may be acquired subsequent to December 26, 1997 and the remainder of
which is not exercisable within 60 days of the date of this Prospectus.
(11) Includes (i) 12,294,500 shares of Common Stock owned by the Principal
Shareholders; (ii) an aggregate of 950,000 shares of Common Stock which
may be acquired upon exercise of options granted by the Principal
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 700,000 shares of Common Stock granted
by the Company pursuant to the Stock Plan, which are not exercisable
within 60 days of the date of this Prospectus. See "Management--Stock
Plan."

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of (i) 100,000,000
shares of Common Stock, par value $0.01 per share, 19,007,630 of which are
outstanding as of September 30, 1997 and (ii) 5,000,000 shares of Preferred
Stock, par value $0.01 per share, none of which are outstanding as of the date
of this Prospectus. 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 incorporated by
reference 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 provide that the number of directors
of the Company shall be established by the By-Laws. The By-Laws currently
provide that the Board of Directors will consist of not fewer than three 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 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 First Union
National Bank of North Carolina.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have outstanding
23,007,630 shares of Common Stock. Of these shares, 10,382,500 shares,
including the shares to be sold in the Offering will be freely tradeable in
the public market without restriction or further registration under the
Securities Act.

The remaining 12,625,130 outstanding shares of Common Stock were issued
pursuant to the Formation Transactions or in connection with the Acquisition
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 one year has
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 two 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.

In connection with the Offering, each of the Principal Shareholders has
agreed, with certain exceptions, not to offer, sell, offer to sell, contract
to sell, or otherwise dispose of any Common Stock, or options or warrants to
acquire Common Stock, for a period of days after the completion of the
Offering without the prior written consent of Merrill Lynch & Co. The Company
has agreed not to sell any shares of Common Stock for a period of days
from the date of this Prospectus without the prior written consent of Merrill
Lynch & Co., except for the sale of shares pursuant to the overallotment
option, the issuance of shares upon the exercise of currently outstanding
stock options and pursuant to the Employee Stock Purchase Plan and the
issuance of shares contingently issuable in connection with the Acquisition.

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 September 30, 1997,
options to acquire an aggregate of 1,854,000 shares of Common Stock had been
granted under the Stock Plan, and 45,000 of such options are currently
exercisable.

On September 17, 1997, the Company filed a registration statement on Form S-
8 under the Securities Act to register all of the shares of Common Stock
subject to purchase under the Employee Stock Purchase Plan. This registration
statement became 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 requirements,
and subject to expiration of the lock-up agreements with the Underwriters. As
of June 30, 1997, no shares of Common Stock had been purchased under the
Employee Stock Purchase Plan.

The Company has entered into a Registration Rights Agreement (the
"Registration Rights Agreement") with the Principal 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 Initial Public 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 Initial Public Offering, to register up to 50% of
the Common Stock held, or acquirable pursuant to the exercise of options
granted by the Principal Shareholders, by each of the parties to the
Registration Rights Agreement, other than the Principal 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 Initial Public 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 Principal Shareholders, by each party to
the Registration Rights Agreement, other than the Principal 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 exceptions 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.

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, if such holder
is so 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.

In connection with the Acquisition, the Company has agreed to file and use
its reasonable best efforts to cause such registration statement to be
declared effective prior to approximately March 31, 1998, a shelf registration
statement with the Commission for the purpose of registering all of the
207,630 shares of Common Stock issued by the Company in connection with the
Acquisition and all of the 430,814 shares of Common Stock contingently
issuable by the Company in connection with the Acquisition. See "Business--The
Acquisition." The Company will use its reasonable best efforts to keep this
shelf registration statement effective for a period ending on the earlier of
(i) such date as all of such shares of Common Stock are tradeable without
restriction under the Securities Act and (ii) the first date on which all of
the shares of Common Stock subject to the shelf registration statement have
been sold pursuant to the shelf registration statement. The Company will bear
the expenses incident to the registration of such shares of Common Stock,
except that such expenses shall not include any underwriting discounts or
commissions, or transfer taxes relating to such shares of Common Stock.

UNDERWRITING

Subject to the terms and conditions contained in a purchase agreement (the
"U.S. Purchase Agreement"), the Company has agreed to sell to the U.S.
Underwriters named below (the "U.S. Underwriters"), and the U.S. Underwriters,
for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated, NationsBanc
Montgomery Securities, Inc., Lehman Brothers Inc. and Smith Barney Inc. are
acting as representatives (the "U.S. Representatives"), have severally agreed
to purchase, the number of shares of Common Stock set forth opposite their
respective names below.

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

Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................
NationsBanc Montgomery Securities, Inc.......................
Lehman Brothers Inc..........................................
Smith Barney Inc.............................................
---------
Total.................................................. 3,200,000
=========

The Company has also entered into a purchase agreement (the "International
Purchase Agreement" and, together with the U.S. Purchase Agreement, the
"Agreements") with certain underwriters outside the United States and Canada
(the "International Managers"), for whom Merrill Lynch International,
NationsBanc Montgomery Securities, Inc., Lehman Brothers Inc. and Smith Barney
Inc. are acting as lead managers (the "Lead Managers"). Subject to the terms
and conditions set forth in the International Purchase Agreement, the Company
has agreed to sell to the International Managers, and the International
Managers have severally agreed to purchase, an aggregate of 800,000 shares of
Common Stock. The public offering price per share and the underwriting
discount per share are identical under the U.S. Purchase Agreement and the
International Purchase Agreement.

In the U.S. Purchase Agreement and the International Purchase Agreement, the
several U.S. Underwriters and the several International Managers
(collectively, the "Underwriters"), respectively, have agreed, subject to the
terms and conditions set forth therein, to purchase all of the shares of
Common Stock being sold pursuant to the Agreements if any of the shares of
Common Stock being sold pursuant to the Agreements are purchased. The U.S.
Purchase Agreement provides that in the event of a default by a U.S.
Underwriter, the purchase commitments of the non-defaulting U.S. Underwriters
may in certain circumstances be increased, and the International Purchase
Agreement provides that, in the event of a default by an International
Manager, the purchase commitments of the non-defaulting International Managers
may in certain circumstances be increased. The closing with respect to the
sale of the shares of Common Stock pursuant to the U.S. Purchase Agreement is
a condition to the closing with respect to the sale of the shares of Common
Stock pursuant to the International Purchase Agreement, and the closing with
respect to the sale of the shares of Common Stock pursuant to the
International Purchase Agreement is a condition to the closing with respect to
the sale of the shares of Common Stock pursuant to the U.S. Purchase
Agreement.

The U.S. Underwriters and the International Managers have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") which provides for
the coordination of their activities. Under the terms of the Intersyndicate
Agreement, the U.S. Underwriters and the International Managers are permitted
to sell shares of Common Stock to each other. Pursuant to the Intersyndicate
Agreement, sales may be made between the International Managers and the U.S.
Underwriters of such number of shares of Common Stock as may be mutually
agreed. The price of any shares of Common Stock so sold shall be the public
offering price, less an amount not greater than the selling concession.

Under the terms of the Intersyndicate Agreement, the U.S. Underwriters and
any dealer to whom they sell shares of Common Stock will agree to offer to
sell or sell shares of Common Stock only to persons whom they

believe are United States Persons or Canadian Persons (as defined in the
Intersyndicate Agreement) or to persons whom they believe intend to reoffer or
resell the same to United States Persons or Canadian Persons, and the
International Managers and any bank, broker or dealer to whom they sell shares
of Common Stock will agree not to offer to sell or sell shares of Common Stock
to persons whom they believe to be United States Persons or Canadian Persons
or to persons whom they believe intend to reoffer or resell the same to United
States Persons or Canadian Persons, except in each case for transactions
pursuant to the Intersyndicate Agreement which, among other things, permits
the Underwriters to purchase from each other and offer for resale such number
of shares of Common Stock as the selling Underwriter or Underwriters and the
purchasing Underwriter or Underwriters may agree.

The U.S. Representatives have advised the Company that the U.S. Underwriters
propose initially to offer the shares of Common Stock offered hereby to the
public at the pubic offering price set forth on the cover page of this
Prospectus, and to certain dealers at such price less a concession not in
excess of $ per share. The U.S. Underwriters may allow, and such dealers
may reallow, a discount not in excess of $ per share to certain other
dealers. After the public offering, the public offering price, concession and
discount may be changed.

The Company has granted to the U.S. Underwriters an option, exercisable for
30 days after the date hereof, to purchase up to 480,000 additional shares of
Common Stock and to the International Managers an option, exercisable for 30
days after the date hereof, to purchase up to 120,000 additional shares of
Common Stock, in each case solely to cover over-allotments, if any, at the
public offering price less the underwriting discount. To the extent that the
U.S. Underwriters exercise such option, each of the U.S. Underwriters will be
obligated, subject to certain conditions, to purchase approximately the same
percentage of such shares which the number of shares of Common Stock to be
purchased by it shown in the foregoing table bears to the total number of
shares of Common Stock set forth in such table.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including certain liabilities under the Securities Act.

The Company has agreed that it will not, with certain exceptions, offer,
sell or otherwise dispose of any shares of Common Stock for a period of
days from the date of this Prospectus without the prior written consent of
Merrill Lynch & Co., except for the sale of shares pursuant to the over-
allotment option, the issuance of shares upon the exercise of currently
outstanding stock options and pursuant to the Employee Stock Purchase Plan and
the issuance of shares contingently issuable in connection with the
Acquisition. Each of the Principal Shareholders has agreed that, for a period
of days from the date of this Prospectus, he or she will not, without the
prior written consent of Merrill Lynch & Co., offer, sell or otherwise
voluntarily dispose of any shares of Common Stock or any securities
convertible into or exercisable for Common Stock.

Until the distribution of the Common Stock is completed, rules of the
Commission may limit the ability of the Underwriters and certain selling group
members to bid for and purchase the Common Stock. As an exception to these
rules, the Underwriters are permitted to engage in certain transactions that
stabilize the price of the Common Stock. Such transactions consist of bids or
purchases for the purpose of pegging, fixing or maintaining the price of the
Common Stock.

If the Underwriters create a short position in the Common Stock in
connection with the Offering (i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus), the U.S.
Representatives and the Lead Managers, respectively, may reduce that short
position by purchasing Common Stock in the open market. The U.S.
Representatives and the Lead Managers, respectively, may also elect to reduce
any short position through the exercise of all or part of the over-allotment
option described above.

purchase shares of Common Stock in the open market to reduce the Underwriters'
short position or to stabilize the price of the Common Stock, they may reclaim
the amount of the selling concession from the Underwriters and selling group
members who sold those shares as part of the Offering.

In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases. The imposition of a penalty
bid might also have an effect on the price of a security to the extent that it
were to discourage resales of the security.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor any of the Underwriters makes any
representation that the U.S. Representatives or the Lead Managers will engage
in such transactions or that such transactions, once commenced, will not be
discontinued without notice.

Charles E. Harris, a director of the Company, is President and Chief
Executive Officer of Ewing and a principal shareholder of Ewing's parent
holding company. The U.S. Representatives have agreed to include Ewing as one
of the U.S. Underwriters.

LEGAL MATTERS

The validity of the Common Stock offered hereby and certain other matters
will be passed upon for the Company 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. Neal, Gerber &
Eisenberg will rely on the opinion of Baker & Hostetler LLP as to certain
matters of law governing the vacation ownership industry. Certain partners of
Neal, Gerber & Eisenberg and attorneys associated with the firm beneficially
own shares of Common Stock. 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.

EXPERTS

The Combined Financial Statements of Vistana, Inc. and combined affiliates
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 have been so
included in reliance upon such reports given upon the authority of such firm
as experts in auditing and accounting.

The Financial Statements of Points of Colorado, Inc. as of March 31, 1997
and 1996 and for each of the years then ended, and the Balance Sheet of
Success Developments, L.L.C. as of December 31, 1996, and the related
Statements of Operations and Members' Equity and Cash Flows for the period
from June 10, 1996 (Date of Inception) to December 31, 1996 included elsewhere
in this Prospectus have been audited by Kreisman Corporation CPAs, independent
certified public accountants, as set forth in their reports appearing
elsewhere herein. The financial statements have been so included in reliance
upon such reports given upon the authority of such firm as experts in auditing
and accounting.

The Combined Financial Statements of The Success Companies at March 31, 1996
and 1997 and for each of the years then ended appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
certified public accountants, as set forth in their report appearing elsewhere
herein, and are included in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.

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, 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.

The Company intends to furnish its shareholders with annual reports
containing combined financial statements audited by an independent public
accounting firm and quarterly reports for the first three quarters of each
fiscal year containing unaudited financial information.

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, or incorporated by reference in, the Registration
Statement, each such statement being qualified in its entirety by such
reference.

INDEX TO FINANCIAL STATEMENTS

VISTANA, INC. AND COMBINED AFFILIATES
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
Condensed Consolidated Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets as of June 30, 1996 and 1997...... F-21
Condensed Consolidated Statements of Income for the Six Months Ended
June 30, 1996 and 1997................................................. F-22
Condensed Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1996 and 1997................................................. F-23
Notes to Unaudited Condensed Consolidated Financial Statements.......... F-24
ACQUIRED COMPANIES
POINTS OF COLORADO, INC.
Financial Statements
Independent Auditors' Report............................................ F-30
Balance Sheets as of March 31, 1996 and 1997 ........................... F-31
Statements of Income and Accumulated Deficit for the Fiscal Years Ended
March 31, 1996 and 1997................................................ F-32
Statements of Cash Flows for the Fiscal Years Ended March 31, 1996 and
1997................................................................... F-33
Notes to Financial Statements........................................... F-34
Unaudited Financial Statements
Balance Sheet as of June 30, 1997....................................... F-38
Statements of Income and Accumulated Deficit for the Three Months Ended
June 30, 1996 and 1997................................................. F-39
Statements of Cash Flows for the Three Months Ended June 30, 1996 and
1997................................................................... F-40
Notes to Unaudited Financial Statements................................. F-41
SUCCESS DEVELOPMENTS, L.L.C.
Financial Statements
Independent Auditors' Report............................................ F-44
Balance Sheet as of December 31, 1996................................... F-45
Statement of Operations and Members' Equity from June 10, 1996 (date of
inception) to December 31, 1996........................................ F-46
Statement of Cash Flows from June 10, 1996 (date of inception) to
December 31, 1996...................................................... F-47
Notes to Financial Statements........................................... F-48
Unaudited Financial Statements
Balance Sheet as of June 30, 1997....................................... F-51
Statement of Operations and Members' Equity for the Six Months Ended
June 30, 1997.......................................................... F-52
Statement of Cash Flows for the Six Months Ended June 30, 1997.......... F-53
Notes to Unaudited Financial Statements................................. F-54
THE SUCCESS COMPANIES:
Combined Financial Statements
Independent Auditors' Report............................................ F-56
Combined Balance Sheets as of March 31, 1996 and 1997 and as of June 30,
1997................................................................... F-57
Combined Statements of Operations for the Fiscal Years Ended March 31,
1996 and 1997 and for the Three Months Ended June 30, 1996 and 1997.... F-58
Combined Statements of Changes in Equity for the Fiscal Years Ended
March 31, 1996 and 1997 and for the Three Months Ended June 30, 1997... F-59
Combined Statements of Cash Flows for the Fiscal Years Ended March 31,
1996 and 1997 and for the Three Months Ended June 30, 1996 and 1997.... F-60
Notes to Combined Financial Statements.................................. F-61

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.

LOGO

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 Principal 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 Principal 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, 2001................................... 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 Principal
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

VISTANA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

JUNE 30, DECEMBER 31,
ASSETS 1997 1996
------ ----------- ------------
(UNAUDITED)

Cash and cash equivalents............................. $ 9,089 $ 6,134
Restricted cash....................................... 5,042 3,847
Customer mortgages receivable, net.................... 111,129 100,166
Other receivables, net................................ 3,959 4,111
Inventory of Vacation Ownership Interests............. 20,952 16,541
Construction in progress.............................. 13,001 8,670
-------- --------
Total Vacation Ownership Interests................ 33,953 25,211
-------- --------
Prepaid expenses and other assets..................... 13,056 13,978
Land held for development............................. 7,664 8,080
Property and equipment, net........................... 12,966 12,395
-------- --------
Total Assets...................................... $196,858 $173,922
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Accounts payable and accrued liabilities.............. $ 5,401 $ 3,829
Accrued compensation and benefits..................... 7,524 9,291
Customer deposits..................................... 7,008 4,995
Deferred income taxes................................. 15,217 --
Other liabilities..................................... 6,721 6,160
Notes and mortgages payable........................... 84,526 118,557
-------- --------
Total Liabilities................................. 126,397 142,832
Minority interest..................................... 4,393 4,442
Shareholder's Equity
Common stock, $.01 par value: Authorized 100,000,000
shares
Issued and outstanding 18,800,000 shares at June
30, 1997........................................... 188 --
Additional paid-in capital.......................... 62,134 --
Retained earnings................................... 3,746 --
Equity of predecessor entities...................... -- 26,648
-------- --------
Total Shareholder Equity.......................... 66,068 26,648
-------- --------
Total Liabilities and Shareholder Equity.......... $196,858 $173,922
======== ========

See accompanying notes to condensed consolidated financial statements.

F-21

VISTANA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
(UNAUDITED)

SIX MONTHS ENDED
JUNE 30,
----------------------
1997 1996
---------- ----------

Revenues:
Vacation Ownership Interest sales.................... $ 40,083 $ 28,622
Interest............................................. 8,923 7,149
Resort............................................... 8,050 7,125
Telecommunications................................... 3,195 3,216
Other................................................ 246 230
---------- ----------
Total revenues..................................... 60,497 46,342
---------- ----------
Costs and operating expenses:
Vacation Ownership Interests cost of sales........... 9,276 7,195
Sales and marketing.................................. 18,287 12,569
Interest expense--treasury........................... 3,130 3,324
Provision for doubtful accounts...................... 2,809 2,034
Resort............................................... 6,562 5,984
Telecommunications................................... 2,580 2,597
General and administrative........................... 4,957 3,377
Depreciation and amortization........................ 1,412 1,074
Interest expense--other.............................. 1,071 2,040
Other................................................ 1,470 145
Deferred executive incentive compensation............ -- 553
---------- ----------
Total costs and operating expenses................. 51,554 40,892
---------- ----------
Operating income....................................... 8,943 5,450
Excess value recognized................................ 36 70
Minority interest...................................... 50 --
---------- ----------
Income before income taxes and extraordinary item...... 9,029 5,520
Provision for income taxes............................. 2,803 --
Non-recurring charge associated with the change of tax
status................................................ 13,201 --
---------- ----------
Income (Loss) before extraordinary item................ (6,975) 5,520
Extraordinary item early extinguishment of debt (net of
tax).................................................. (825) --
---------- ----------
Net Income (Loss).................................. $ (7,800) $ 5,520
========== ==========
Per Share Data:
Loss per share before extraordinary item............. $ (.40) --
Extraordinary item................................... $ (.05) --
---------- ----------
Net loss per share................................. $ (.45) --
========== ==========
Weighted average number of shares outstanding:......... 17,317,956 --
========== ==========
Pro Forma Share Data:
Income before income taxes........................... $ 5,520
Income tax provision................................. 2,048
----------
Net income........................................... $ 3,472
==========
Net income per share................................. $ 0.24
==========
Weighted average number of shares outstanding........ 14,175,000
==========

See accompanying notes to condensed consolidated financial statements.

F-22

VISTANA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(AMOUNTS IN THOUSANDS)
(UNAUDITED)

SIX MONTHS ENDED
JUNE 30,
------------------
1997 1996
-------- --------

Operating activities
Net Income (Loss)............................................ $ (7,800) $ 5,520
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization expense...................... 1,412 1,074
Amortization of discount on customer mortgages receivable.. (1,531) (1,085)
Provision for doubtful accounts............................ 2,809 2,034
Minority interest.......................................... (50) 0
Deferred income taxes...................................... 15,217 0
Changes in operating assets and liabilities
Other receivables, net................................... 152 (380)
Vacation ownership interests............................. (8,325) (4,547)
Prepaid expenses and other assets........................ 313 1,743
Accounts payable and accrued liabilities................. 1,572 (2,441)
Accrued compensation and benefits........................ (1,767) (9)
Customer deposits........................................ 2,013 1,162
Repurchase obligation.................................... 0 (1,179)
Other liabilities........................................ 561 436
-------- --------
Net cash provided by operating activities.............. 4,576 2,328
Investing activities
Expenditures for land, property and equipment................ (1,374) (473)
Origination of customer mortgages receivable................. (12,241) (7,562)
Additions to restricted cash................................. (1,195) (77)
-------- --------
Net cash used in investing activities.................. (14,810) (8,112)
Financing activities
Proceeds from notes and mortgages payable.................... 26,130 30,226
Payments on notes and mortgages payable...................... (60,161) (22,345)
Proceeds from public offering................................ 51,615 0
Payments of public offering costs............................ (2,150) 0
Equity distributions/redemption.............................. (2,245) (1,778)
-------- --------
Net cash provided by financing activities.............. 13,189 6,103
-------- --------
Net increase in cash and cash equivalents.............. 2,955 319
Cash and cash equivalents, beginning of period............... 6,134 7,543
-------- --------
Cash and cash equivalents, end of period..................... $ 9,089 $ 7,862
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest..................... $ 4,876 $ 5,376
======== ========
Cash paid during the period for taxes........................ $ 280 $ --
======== ========

F-23

VISTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1. GENERAL

Vistana, Inc. and its consolidated subsidiaries (the "Company") generate
revenues from the sale and financing of vacation ownership interests ("VOI's")
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 VOI's, (2) providing consumer financing for
the purchase of VOI's at its resorts, (3) managing the operations of its
resorts and related amenities, and (4) installation and maintenance of
telecommunications equipment for others on a limited basis. The Company sells
VOI's to both domestic and foreign purchasers. All contracts relating to the
sale of VOI's are denominated in United States (U. S.) dollars.

The condensed consolidated financial statements shown herein for the Company
and its consolidated subsidiaries for each respective period include the
operations of its predecessors in interest. The Company became the parent
company for all of the operations of its predecessors in connection with its
initial public offering (the "Offering") completed on February 28, 1997.

At June 30, 1997, the condensed consolidated financial statements of the
Company include the accounts of the Company and its consolidated subsidiaries
and two partnerships between one or more subsidiaries 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.

The condensed consolidated financial statements of the Company as of and for
the six months ended June 30, 1997 have not been audited. In the opinion of
management, the unaudited condensed consolidated financial statements include
all adjustments and accruals (consisting of normal recurring adjustments)
necessary to present fairly the Company's consolidated financial position at
June 30, 1997 and the consolidated results of its operations for the six
months ended June 30, 1997. Results for interim periods are not necessarily
indicative of the results to be expected during the remainder of the current
year or for any future period. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been omitted or condensed. All
significant intercompany accounts and transactions have been eliminated in
consolidation.

NOTE 2. EFFECTIVE NEW ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128 "Earnings Per Share" which
simplifies the calculation of earnings per share as currently calculated under
APB 15. Compliance with this statement cannot be implemented by the Company
before December 31, 1997.

In February 1997 FASB issued Statement of Financial Accounting Standards No.
129 "Disclosure of Information about Capital Structure" which establishes
standards for disclosing information about an entity's capital structures.
This Statement is effective for financial statements for periods ending after
December 15, 1997. This Statement will not have a material impact on the
Company.

In June 1997, FASB issued Statement of Financial Accounting Standards No.
130 "Reporting Comprehensive Income" which establishes standards for reporting
and display of comprehensive income and its components (revenues, expenses,
gains, and losses) in a full set of general-purpose financial statements. This
Statement requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other

F-24

financial statements. This statement is effective for fiscal years beginning
after December 15, 1997. This Statement will not have a material impact on the
Company.

NOTE 3. EARNINGS PER SHARE

Earnings per share is calculated on the weighted average number of shares
outstanding. The dilutive effect of common stock equivalents for the
computation of earnings per share was less than 3% for the six months ended
June 30, 1997, therefore, no adjustment has been made to the weighted average
number of shares outstanding. For periods prior to the Offering on February
28, 1997, 14,175,000 shares were assumed to be outstanding which included the
shares issued by the Company in exchange for the interests in the predecessor
corporations and limited partnerships. Earnings per share for the six month
period ended June 30, 1996 has been adjusted to reflect proforma tax expense
of $2.0 million.

NOTE 4. CAPITAL TRANSACTIONS AND PUBLIC OFFERING

During the three months ended March 31, 1997, the Company consummated the
Offering of 4,625,000 shares of the Company's common stock at a price of $12
per share. The net proceeds from the Offering, after deducting the related
issuance costs, amounted to approximately $49.5 million. In addition,
14,175,000 shares of the Company's common stock were issued just prior to and
in connection with the formation transactions to the former holders of
interests in the Company's predecessor corporations and limited partnerships.

In addition, in connection with the Offering and the formation transactions,
(1) former equity holders of the Company's predecessor corporations and
limited partnerships received a distribution of approximately $2.5 million,
$0.3 million of which represented the balance of such holders' federal and
state income tax liability attributable to their ownership of such entities
through the date of the Offering and $2.2 million of which represented the
retained earnings of the Company's predecessor corporations and limited
partnerships for which such holders had previously paid income tax; and (2)
the Company used approximately $39.8 million to prepay outstanding
indebtedness, together with accrued interest and related prepayment penalties.

The formation transactions have been accounted for as a reorganization of
entities under common control in a manner similar to a pooling of interests.
Accordingly, the net assets of the predecessor corporations and limited
partnerships were recorded at the predecessor entity's basis. In addition, the
accompanying condensed consolidated financial statements reflect historical
results of operations of the predecessor corporations and limited partnerships
on a combined basis.

NOTE 5. CUSTOMER MORTGAGES RECEIVABLE, NET

At June 30, 1997 and December 31, 1996, customer mortgages receivable, net
consisted of:

JUNE 30, DECEMBER 31,
1997 1996
-------- ------------
(IN THOUSANDS)

Customer mortgages receivable, gross............. $125,213 $115,970
Less:
Unamortized discount on repurchased customer
mortgages receivable.......................... (4,009) (5,539)
Unamortized excess value over consideration.... (50) (74)
Allowance for loss on receivables.............. (10,025) (10,191)
-------- --------
Customer mortgages receivable, net......... $111,129 $100,166
======== ========

As of June 30, 1997 and December 31, 1996, customer mortgages receivable,
gross, from foreign buyers aggregated approximately $29.2 million and $28.1
million respectively, with obligors within no individual foreign country
aggregating more than 5% of gross outstanding customer mortgages receivable.

Stated interest rate on customer mortgages receivable outstanding at June
30, 1997 range from 00.0% to 17.9% per annum (averaging approximately 13.9%
per annum contractually). Interest is not imputed on customer mortgages
receivable with less than a market interest rate because such amounts are
immaterial.

F-25

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

SIX MONTHS
ENDED JUNE 30,
----------------
1997 1996
------- -------
(IN THOUSANDS)

Balance, beginning of period............................ $10,191 $ 9,009
Provision for doubtful accounts......................... 2,809 2,034
Customer mortgages receivable charged off............... (2,975) (1,321)
------- -------
Balance, end of period.................................. $10,025 $ 9,722
======= =======

NOTE 6. NOTES AND MORTGAGES PAYABLE

At June 30, 1997 and December 31, 1996 notes and mortgages payable consisted
of:

JUNE
30, DECEMBER 31,
1997 1996
------- ------------
(IN THOUSANDS)

Notes payable and mortgage obligations to lender,
cross collateralized, which bear interest at prime
plus 2% (10.50% per annum at June 30, 1997). A
total of $147.3 million may be borrowed. Maturity
dates range from October 30, 1997 to May 2004.
Notes are secured by customer mortgages receivable,
land and improvements.............................. $50,807 $ 70,135
Notes payable to banks bearing interest ranging from
8.35% to 11.34% per annum and with maturity dates
ranging from December 1997 to December 2005. Notes
are secured by customer mortgages receivable, land
and improvements, and equipment.................... 9,487 31,893
Notes payable and mortgage obligations to lender,
cross collateralized, which bear interest at prime
plus 2% (10.50% per annum at June 30, 1997) plus
incentive fees. A total of $39.4 million may be
borrowed. Monthly interest payments are required.
Maturity dates range from June 25, 2001 to July 24,
2001............................................... 24,232 16,529
------- --------
Total notes and mortgages payable............... $84,526 $118,557
======= ========

During the quarter ended March 31, 1997, the Company repaid $38.9 million of
debt from the proceeds of the Offering. In that quarter, the Company recorded
an expense relating to the write-off of previously capitalized fees and
prepayment penalties of $0.8 million, net of related tax benefits of $0.5
million.

NOTE 7. INCOME TAXES

As the result of the Offering and the formation transactions, the Company
became subject to federal, state and foreign income taxes and was required to
record in the quarter ended March 31, 1997, a deferred tax liability of $13.2
million for cumulative temporary differences between financial reporting and
tax reporting. The deferred tax assets, deferred tax liabilities and the
current tax provision were estimated based on management's current estimate as
of the end of the period. The provision for income taxes reflects the income
tax expense from the date of the Offering through the applicable three or six
month period.

F-26

The Company reports most of its sales of VOI's on the installment method for
federal income tax purposes. As a result, the Company does not recognize
taxable income on these sales until the installment payments have been
received from the Company's customers. The Company became subject to the
federal Alternative Minimum Tax ("AMT") as a result of the deferred income
which results from the installment sales method in the period ended June 30,
1997. In the current quarter the Company began paying state AMT tax and the
Company expects to pay state AMT for the balance of the fiscal year.

Under Section 453(l) of the Internal Revenue Code, interest may be imposed
on the amount of tax attributable to the installment payments on customer
receivables for the period beginning on the date of sale and ending on the
date the related tax is paid. If the Company is otherwise not subject to pay
tax in a particular year, no interest is imposed since the interest is based
on the amount of tax paid in that year. The Company has not included a
provision for this interest, as it is not currently subject to the tax,
however, in the future it may become so. The Company continues to monitor its
tax provision and may adjust it to provide for this interest in the future.

NOTE 8. STOCK PLANS

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 $11.00 per share, none of which were exercised during
the period. In addition, in the quarter ended March 31, 1997, the Company
granted 1,026,000 options to purchase shares of Common Stock at an exercise
price of $12.00 per share to certain employees, directors and an outside
consultant. No options were exercised during the period. These options vest
over a period of four years and terminate ten years after the date of grant.

Certain of the former owners of the Company's predecessor corporations and
limited partnership interests granted 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 $12 per share. These options are
currently exercisable in full and will terminate ten years after the date of
grant.

NOTE 9. PERCENTAGE OF COMPLETION

In the current quarter the Company began pre-construction sales at its
Embassy Vacation Resort in Myrtle Beach, South Carolina. Because construction
had not materially begun at June 30, 1997, no sales revenue for these pre-
construction VOI sales have been recognized. There were no pre-construction
VOI sales or any VOI sales recognized under percentage of completion method in
either the first quarter of 1997 or for the six months ended June 30, 1997.
The Company intends to recognize pre-construction VOI sales on the percentage
of completion method as construction progresses.

NOTE 10. SUBSEQUENT EVENTS

Subsequent to June 30, 1997, the Company entered into a $12.7 million loan
facility for the construction of Embassy Vacation Resort in Myrtle Beach,
South Carolina and related amenities, as well as a related $10.0 million
receivables based revolving credit facility.

Subsequent to June 30, 1997, the Company executed a definitive agreement to
purchase from an affiliate of The PGA of America approximately 25 acres of
land adjacent to an existing 36-hole golf facility owned by another affiliate
of The PGA of America in Port St. Lucie, Florida. The present plan is for the
property to contain at least 250 units, representing a total of at least
12,750 VOI's. The purchase price for this property is $3.75 million, and the
Company intends to finance its purchase of the property through the payment of
$1.5 million in cash from its existing working capital and the issuance of a
non-interest bearing note to the seller in the principal amount of $2.25
million. The closing of the purchase of the land is subject to customary
conditions precedent. Concurrent with the closing of the purchase of the land,
the Company and an affiliate of The PGA of America will execute a long-term
affiliation agreement which provides for, among other things, the development
of future vacation ownership resorts and marketing and golf access agreements
for the Port St. Lucie, Florida property.

F-27

In addition, on September 16, 1997 the Company purchased the entities
comprising the Success Companies, Success Developments, L.L.C. and Points of
Colorado, Inc. (collectively "Success and Points"). Success and Points
develop, market, finance and operate vacation ownership resorts in Arizona and
Colorado. The Company acquired all of the outstanding stock of Success and
Points for a purchase price of approximately $24.0 million in cash,
207,630 shares of common stock and contingent consideration of 430,814 shares
of Common Stock of the Company. Payout of these shares is contingent upon
Success and Points achieving certain operating criteria. In each of the
calendar years 1998 through 2000 upon satisfying certain net proceeds from
sales levels as set forth in the Agreement and Plan of Reorganization dated
August 15, 1997, all of the contingent consideration is payable to the selling
parties. Management of the Company has determined that the contingent
consideration is an additional cost of the acquisition rather than
compensation expense.

The purchase method of accounting will be followed in accounting for this
transaction. The goodwill associated with the acquisition will be amortized on
a straight-line basis over 20 years.

F-28

POINTS OF COLORADO, INC.

AUDITED FINANCIAL STATEMENTS

MARCH 31, 1997 AND 1996

F-29

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Points of Colorado, Inc.
Denver, Colorado

We have audited the accompanying balance sheets of Points of Colorado, Inc.
as of March 31, 1997 and 1996, and the related statements of income and
accumulated deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Points of Colorado, Inc.
as of March 31, 1997 and 1996, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted
accounting principles.

KREISMAN CORPORATION

Denver, Colorado
May 12, 1997

F-30

POINTS OF COLORADO, INC.

BALANCE SHEETS

MARCH 31,
------------------------
1997 1996
----------- -----------
ASSETS

Cash and Cash Equivalents $ 652,426 $ 431,928
Other Receivables 99,779 92,524
Timeshare Notes Receivable, Less Allowance for
Doubtful Notes of $686,764 in 1997 and $481,377
in 1996 13,108,055 6,545,516
Other Notes Receivable 793,349 -0-
Holdback on Timeshare Notes 549,080 883,338
Inventory--Timeshare Units 1,699,143 3,370,381
Investment--Success Developments, LLC 746,107 -0-
Prepaid Expenses and Other Assets 85,076 97,720
Deferred Compensation Asset 397,573 227,072
Furniture and Equipment 291,755 260,149
Less Accumulated Depreciation (204,221) (165,219)
----------- -----------
Total Assets $18,218,122 $11,743,409
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
Accounts Payable $ 42,852 $ 83,428
Accrued Payroll and Commissions 318,651 176,784
Customer Deposits 73,061 44,107
Note Payable to Marine Midland Bank 4,000,510 1,839,715
Other Liabilities 134,677 44,145
Reserve for Reacquisition of Recourse Notes -0- 150,000
Deferred Federal and State Income Taxes 1,950,035 472,135
Deferred Compensation Payable 397,573 227,072
----------- -----------
Total Liabilities 6,917,359 3,037,386
Stockholders' Equity
Common Stock, No Par Value, Authorized 50,000
Shares, Issued and Outstanding 80 Shares 1 1
Additional Paid-In Capital 14,136,878 14,136,878
Accumulated Deficit (2,836,116) (5,430,856)
----------- -----------
Total Stockholders' Equity 11,300,763 8,706,023
----------- -----------
Total Liabilities and Stockholders' Equity $18,218,122 $11,743,409
=========== ===========

See Notes to Financial Statements.

F-31

POINTS OF COLORADO, INC.

STATEMENTS OF INCOME AND ACCUMULATED DEFICIT

YEAR ENDED MARCH 31,
------------------------
1997 1996
----------- -----------

Income
Sales--Timeshare Units $13,694,159 $ 6,686,950
Financing Income, Net of Servicing Costs 1,086,253 591,590
Other Income 203,913 -0-
----------- -----------
14,984,325 7,278,540
Cost of Sales
Timeshare Units Sold 2,371,787 1,334,141
Closing Costs 739,790 369,918
----------- -----------
3,111,577 1,704,059
----------- -----------
Gross Profit 11,872,748 5,574,481
Other Expenses
Sales and Marketing 6,771,878 3,289,190
General and Administrative 1,175,919 1,073,539
Other Expenses -0- 175,369
----------- -----------
7,947,797 4,538,098
----------- -----------
Income Before Other Income 3,924,951 1,036,383
Other Income
Reduction of Reserve for Reacquisition of Recourse
Notes 147,689 481,969
----------- -----------
Income Before Income Taxes 4,072,640 1,518,352
Provision for Income Taxes (1,477,900) (399,199)
----------- -----------
Net Income 2,594,740 1,119,153
Accumulated Deficit
Beginning of Period (5,430,856) (6,550,009)
----------- -----------
End of Period $(2,836,116) $(5,430,856)
=========== ===========

See Notes to Financial Statements.

F-32

POINTS OF COLORADO, INC.

STATEMENTS OF CASH FLOWS

YEAR ENDED MARCH 31,
-----------------------
1997 1996
----------- ----------

Cash Flows from Operating Activities
Net Income $ 2,594,740 $1,119,153
Adjustments to Reconcile Net Income to Cash Provided
By Operating Activities:
Depreciation 40,487 35,570
Income from Success Developments, LLC (121,107) -0-
Deferred Federal and State Income Taxes 1,477,900 399,199
Discount Income on Note Collections (31,729) (49,453)
Reduction of Reacquisition of Uncollectible Notes
Receivable (147,689) (481,969)
Reserve for Doubtful Notes 269,186 152,928
Changes in Operating Assets and Liabilities:
Decrease in Inventory--Timeshare Units 1,671,238 1,334,141
(Increase) in Other Assets (165,112) (258,226)
Increase in Accounts Payable and Other Liabilities 391,278 242,483
----------- ----------
Total Adjustments 3,384,452 1,374,673
----------- ----------
Cash Provided by Operating Activities 5,979,192 2,493,826
----------- ----------
Cash Flows from Investing Activities
Origination of Timeshare Notes (11,226,861) (5,915,665)
Principal Reductions of Timeshare Notes 4,424,554 1,696,521
Acquisition and Loans Related to Success
Developments, LLC (1,418,349) -0-
Purchases of Furniture and Equipment (33,091) (67,822)
----------- ----------
Cash Used by Investing Activities (8,253,747) (4,286,966)
----------- ----------
Cash Flows from Financing Activities
Loan from Marine Midland Bank 3,781,499 1,977,136
Payments to Marine Midland Bank (1,620,704) (356,282)
Decrease in Holdback on Timeshare Notes 334,258 346,238
----------- ----------
Cash Provided by Financing Activities 2,495,053 1,967,092
----------- ----------
Net Increase in Cash 220,498 173,952
Cash and Equivalents
Beginning of Period 431,928 257,976
----------- ----------
End of Period $ 652,426 $ 431,928
=========== ==========
Supplemental Cash Flow Disclosures:
Interest Paid $ 279,473 $ 84,696
=========== ==========

See Notes to Financial Statements.

F-33

POINTS OF COLORADO, INC.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 1997

NOTE A--THE COMPANY

Points of Colorado, Inc. (the "Company"), is the developer and manager of
Falcon Point and Eagle Point (collectively, the "Associations"), two timeshare
projects that contain 54 and 58 condominiums, respectively. The Company is the
owner of the remaining unsold timeshare interests and markets and sells them
to the public along with timeshare units purchased from Christie Lodge. The
Company is a Colorado corporation which was organized on July 31, 1986.

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash in the bank as well as a working cash
management account held for the primary purpose of general liquidity. The
holdings in the cash management account normally mature within three months
from the date of acquisition.

Inventory--Timeshare Units

Timeshare inventories are valued at the lower of cost to acquire, develop,
and renovate the projects or market. Cost of timeshare units sold for Eagle
Point and Falcon Point is based upon the combined costs of inventories
allocated to the individual weeks on the basis of the relative sales value of
each week, and upon actual cost for Christie Lodge.

Allowance for Doubtful Notes

The Company provides an allowance for doubtful notes for those notes held by
the Company based on a review of the current status of existing receivables
and historical collection experience.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation.
Depreciation is provided for in amounts sufficient to relate the cost of
depreciable assets to operations over their estimated service lives using
accelerated methods. The estimated lives used in determining depreciation are:

Furniture and Equipment......................................... 5-7 years

Maintenance, repairs, and minor renewals are charged to expense as incurred,
whereas improvements and major renewals of facilities are capitalized. Upon
sale or disposition of properties, the asset account is relieved of the cost
and the accumulated depreciation account is charged with depreciation taken
prior to the sale, and any resultant gain or loss is credited or charged to
earnings.

F-34

POINTS OF COLORADO, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Revenue and Cost Recognition

Revenue from timeshares is recognized upon closing of the sale. Acquisition
and other direct costs and indirect costs related to acquisition and
development of timeshare units are capitalized. Capitalized costs are allocated
to individual timeshare units. The capitalized costs of units are charged to
earnings when the related revenue is recognized. Selling and administrative
costs are charged to earnings when incurred.

Concentration of Credit Risk

Credit risk with respect to timeshare notes receivable is generally
diversified due to the large number of customers and their dispersion across
many different geographic areas of the United States. The Company performs
credit evaluations of its customers' financial condition, and all its notes
receivable are collateralized by the interval units sold.

NOTE C--INVESTMENT--SUCCESS DEVELOPMENTS, LLC

The Company and its partners organized Success Developments, LLC on June 10,
1996, and the Company contributed $625,000 for its fifty percent interest. The
Limited Liability Company is the owner and developer of Villas of Cave Creek, a
timeshare project in Arizona. The Company is the managing member. This
investment is being accounted for using the equity method of accounting. The
investment account has been increased for the Company's share of the investee's
net income as of March 31, 1997.

Condensed unaudited financial information of the Limited Liability Company as
of March 31, 1997 is summarized below:

Assets........................................................ $7,215,232
Liabilities................................................... $5,723,018
Results of Operations from date of inception.................. $ 242,214

By an agreement dated January 1, 1997, the Company provides management
services to the Limited Liability Company.

The Company has loaned the LLC construction funds and has loaned the other
partners acquisition funds. Note principal and interest of 15% per annum from
the Limited Liability Company are due December 1, 1997. Note principal and
interest of 15% per annum from other members are due January 31, 1999. At March
31, 1997, the aggregate of the notes receivable and accrued interest was
$793,349.

The Company is the guarantor on a $10,000,000 two-year line of credit dated
July 29, 1996 in conjunction with the investment.

NOTE D--TRANSACTIONS WITH MARINE MIDLAND BANK

The majority of timeshare week sales are financed by notes secured by the
weeks purchased. Notes were sold to Marine by the Company during 1993 and 1994
under an Agreement of Finance ("Agreement"), dated July 30, 1993, with full
recourse to the Company to repurchase any note that becomes delinquent in
excess of sixty days. The Agreement requires the Company to maintain a net
worth of $2,500,000. The Company maintained a Reserve for the Reacquisition of
Recourse Notes, which was $150,000 for the year ended March 31, 1996. The
amount was reduced to $0 in the current year due to sufficient projected
collateral.

In addition, Marine holds back, in a Reserve Account, 10% of the principal
balance of the notes so purchased, to provide additional security in case of
default. The Company has the right to receive the amount by which the Reserve
Account exceeds 15% of the remaning principal balance of the notes owned by
Marine on

F-35

POINTS OF COLORADO, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

July 30th of each year. At March 31, 1997, Marine owned 790 notes which were
sold to Marine by the Company, with a principal balance of $2,465,021. The
Reserve Account balance of $549,080 was 22.27% of that amount.

The Agreement also requires Marine to pay the Company monthly an Interest
Differential between the interest earned on the notes and a Minimum Required
Yield established by Marine at the time the note was purchased by Marine. At
March 31, 1997, the aggregate Interest Differential to be paid over four years
on the 790 notes was $188,532. The actual amount of Interest Differential that
will be received by the Company is dependent upon the performance of the
portfolio and the amount of early payoffs of the notes. Due to the inherent
uncertainty of the future value of the Differential, no asset is recorded at
the time of sale; consequently, the monthly Interest Differential is recorded
as income when earned. During the years ended March 31, 1997 and 1996, the
Company earned $167,202 and $276,710 of Interest Differential, respectively.

On December 2, 1996, Marine agreed to provide a $7,500,000 Term Loan ("Loan")
to the Company for four years. Under its provisions, Marine will advance 85% of
the principal amount of all notes pledged on the Loan. Interest on the Loan is
computed at 2% over Marine's Prime Rate (10.5% at March 31, 1997). All payments
from the collateralized notes go directly to Marine, and monthly interest
charges are added to the Loan balance. The Company and its shareholders have
agreed to pay Marine 85% of the outstanding principal balance of any pledged
note that is more than sixty days delinquent. At March 31, 1997, the Company
owed $4,000,510 to Marine and had pledged notes with an aggregate principal
balance of $5,333,219. The Company has the option to lock-in its interest rate
under this loan. At March 31, 1997, $898,759 of the outstanding loan balance
had a fixed interest rate of 8.78%, and $1,469,409 had a fixed interest rate of
9.75%.

NOTE E--INCOME TAXES

The Company provides for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes."
Under SFAS No. 109, deferred tax assets or liabilities are determined based on
the difference between the financial reporting and tax basis of assets and
liabilities and enacted tax rates that will be in effect for the year in which
the differences are expected to reverse. The provision for deferred income
taxes at March 31, 1997 and 1996, of $1,477,900 and $399,199 respectively
results primarily from the use of the installment sales method of reporting
profits and the use of the specific charge off method for bad debts for tax
purposes. At March 31, 1997, the Company had aggregate operating loss
carryforwards of approximately $2,600,000, which will expire on March 31, 2011
and approximately $1,400,000, which will expire on March 31, 2012.

NOTE F--DEFERRED COMPENSATION PLAN

On July 1, 1995, the Company implemented a Nonqualified Deferred Compensation
Plan which permits an eligible officer or director to reduce the Compensation
that the Company would otherwise pay by an amount equal to a percentage of his
Compensation or by a specific dollar amount. Such election, if any, is made in
writing each quarter of the Plan Year. The deferred compensation is
distributable in cash after termination of employment, the Participant's death,
or the Participant attaining the age of 55 years, and amounted to $397,573 and
$227,072 at March 31, 1997 and 1996, respectively. The agreement is funded
under a grantor trust agreement whereby the Company pays to the grantor trust
amounts necessary to meet the obligations under the deferred compensation
agreements. The deferred compensation expense was $170,501 and $227,072 for the
years ended March 31, 1997 and 1996, respectively.

The Company has recorded the assets and liabilities for the deferred
compensation at gross amounts in the Balance Sheet because such assets and
liabilities belong to the Company rather than to any external plan or trust.
The assets are recorded at cost, and the liability is computed and recorded in
accordance with SFAS 87, "Employers' Accounting For Pensions."

F-36

POINTS OF COLORADO, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE G--STOCK REDEMPTION AGREEMENT

Under a stock redemption agreement dated December 9, 1994, the Company is
obligated to purchase the stock of a terminated, permanently disabled, or
deceased stockholder at a price determined annually by the Company at its most
recent annual meeting or by formulas and under terms contained in the
agreement. The Company has purchased life insurance on each stockholder in
order to help fund these obligations.

In addition, there are restrictive transfer provisions which govern the sale
or transfer of the Company's stock unrelated to the termination, disability, or
death of a stockholder. The Company has a first right of refusal for 30 days to
purchase the shares offered. The remaining stockholder(s) have a second right
of refusal for 30 days to purchase the shares refused by the Company.
Acceptance by all the stockholders is required to sell stock to an outside
third party.

NOTE H--COMMITMENTS AND CONTINGENCIES

The Company leases its office space under a lease which expired on April 30,
1997. On May 30, 1997, the lease was renewed for a five year term. Future
required minimum annual rental payments are as follows:

Year Ending March 31, 1998........................................ $77,210
1999.................................................... 79,215
2000.................................................... 81,412
2001.................................................... 84,052
2002.................................................... 86,692

NOTE I--FINANCIAL INSTRUMENTS

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations
of credit risk consist principally of its cash. The Company maintains cash
balances at several financial institutions located in Colorado. Balances at
each bank are insured by the Federal Deposit Insurance Corporation up to
$100,000. The Company carries some funds in excess of the Federal Deposit
Insurance Corporation limit.

Fair Value

Fair value estimates presented below are based on relevant market
information. As these estimates are subjective in nature and involve
uncertainties and significant judgement, they are not necessarily indicative of
the amount that the Company could realize on a current market exchange. The
fair value disclosures for financial instruments are as follows:

Cash and Cash Equivalents: The carrying amounts reported in the balance
sheets approximate their fair values at March 31, 1997 and 1996.

Loans Receivable: The net carrying amounts of loans receivable are a
reasonable estimate of their fair values at March 31, 1997 and 1996 based
on historical payment experiences.

Financing Arrangements: The carrying amounts of the variable and fixed
interest rate borrowings approximated their fair values at March 31, 1997
and 1996.

F-37

POINTS OF COLORADO, INC.

BALANCE SHEET

JUNE 30, 1997

ASSETS
------ (UNAUDITED)

Cash and Cash Equivalents.............................................. $ 544,598
Other Receivables...................................................... 257,419
Timeshare Notes Receivable, Less Allowance for Doubtful Notes of
$744,165.............................................................. 14,233,820
Other Notes Receivable................................................. 818,090
Holdback on Timeshare Notes............................................ 330,858
Inventory--Timeshare Units............................................. 1,461,822
Investment--Success Developments, LLC.................................. 937,856
Prepaid Expenses and Other Assets...................................... 32,321
Deferred Compensation Asset............................................ 443,448
Furniture and Equipment................................................ 300,337
Less Accumulated Depreciation........................................ (211,954)
-----------
Total Assets....................................................... $19,148,615
===========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Liabilities
Accounts Payable..................................................... $ 34,935
Accrued Payroll and Commissions...................................... 250,364
Customer Deposits.................................................... 145,279
Note Payable to Marine Midland Bank.................................. 3,739,283
Other Liabilities.................................................... 1,106,753
Deferred Federal and State Income Taxes.............................. 1,518,160
Deferred Compensation Payable........................................ 443,448
-----------
Total Liabilities.................................................. 7,238,222
Stockholders' Equity
Common Stock, No Par Value, Authorized 50,000 Shares, Issued and
Outstanding
80 Shares........................................................... 1
Additional Paid-In Capital........................................... 14,136,878
Accumulated Deficit.................................................. (2,226,486)
-----------
Total Stockholders' Equity......................................... 11,910,393
-----------
Total Liabilities and Stockholders' Equity....................... $19,148,615
===========

See Notes to Financial Statements.

F-38

POINTS OF COLORADO, INC.

STATEMENTS OF INCOME AND ACCUMULATED DEFICIT

THREE MONTHS ENDED JUNE 30,
----------------------------
1996 1997
------------- -------------
(UNAUDITED) (UNAUDITED)

Income
Sales--Timeshare Units.......................... $ 3,134,200 $ 2,961,744
Financing Income, Net of Servicing Costs........ 177,065 426,029
Other Income.................................... -0- 191,749
------------- -------------
3,311,265 3,579,522
Cost of Sales
Timeshare Units Sold............................ 585,514 553,696
Closing Costs................................... 160,849 181,013
------------- -------------
746,363 734,709
------------- -------------
Gross Profit.................................. 2,564,902 2,844,813
Other Expenses....................................
Sales and Marketing............................. 1,491,725 1,547,254
General and Administrative...................... 269,669 319,804
------------- -------------
1,761,394 1,867,058
------------- -------------
Income Before Income Taxes.................... 803,508 977,755
Provision for Income Taxes...................... (309,500) (368,125)
------------- -------------
Net Income.................................... 494,008 609,630
Accumulated Deficit...............................
Beginning of Period............................. (5,430,856) (2,836,116)
------------- -------------
End of Period................................... $(4,936,848) $(2,226,486)
============= =============

See Notes to Financial Statements.

F-39

POINTS OF COLORADO, INC.

STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED JUNE 30,
----------------------------
1996 1997
------------- -------------
(UNAUDITED) (UNAUDITED)

Cash Flows from Operating Activities
Net Income..................................... $ 494,008 $ 609,630
Adjustments to Reconcile Net Income to Cash
Provided By Operating Activities:
Depreciation................................. 8,491 7,733
Income from Success Developments, LLC........ -0- (191,749)
Deferred Federal and State Income Taxes...... 309,500 (431,875)
Discount Income on Note Collections.......... (13,973) (5,853)
Reserve for Doubtful Notes................... 79,966 74,403
Changes in Operating Assets and Liabilities:
Decrease in Inventory--Timeshare Units....... 438,512 237,321
(Increase) in Other Assets................... (25,531) (104,885)
Increase in Accounts Payable and Other
Liabilities................................. 129,491 968,090
------------- -------------
Total Adjustments.......................... 926,456 553,185
------------- -------------
Cash Provided by Operating Activities............ 1,420,464 1,162,815
------------- -------------
Cash Flows from Investing Activities
Origination of Timeshare Notes................. (2,670,068) (2,363,003)
Principal Reductions of Timeshare Notes........ 1,011,521 1,168,688
Loans Related to Success Developments, LLC..... -0- (24,741)
Purchases of Furniture and Equipment........... (10,510) (8,582)
------------- -------------
Cash Used by Investing Activities................ (1,669,057) (1,227,638)
------------- -------------
Cash Flows from Financing Activities
Loan from Marine Midland Bank.................. 575,249 592,474
Payments to Marine Midland Bank................ (254,444) (853,701)
Decrease in Holdback on Timeshare Notes........ 11,093 218,222
------------- -------------
Cash Provided by Financing Activities............ 331,898 (43,005)
------------- -------------
Net Increase (Decrease) in Cash.................. 83,305 (107,828)
Cash and Equivalents
Beginning of Period............................ 431,928 652,426
------------- -------------
End of Period.................................. $ 515,233 $ 544,598
============= =============
Supplemental Cash Flow Disclosures:
Interest Paid.................................. $ 41,169 $ 105,100
============= =============

See Notes to Financial Statements.

F-40

POINTS OF COLORADO, INC.

NOTES TO FINANCIAL STATEMENTS

THREE MONTHS ENDED JUNE 30, 1997
(UNAUDITED)

NOTE A--INVESTMENT--SUCCESS DEVELOPMENTS, LLC

The Company and its partners organized Success Developments, LLC on June 10,
1996, and the Company contributed $625,000 for its fifty percent interest. The
Limited Liability Company is the owner and developer of Villas of Cave Creek,
a timeshare project in Arizona. The Company is the managing member. This
investment is being accounted for using the equity method of accounting. The
investment account has been increased for the Company's share of the
investee's net income as of June 30, 1997.

Condensed unaudited financial information of the Limited Liability Company
as of June 30, 1997 is summarized below:

Assets................................. $8,403,096
Liabilities............................ $6,527,384
Results of Operations from date of
inception............................. $ 625,712

By agreement, the Company provides management services to the Limited
Liability Company.

The Company has loaned the LLC construction funds and has loaned the other
partners acquisition funds. Note principal and interest of 15% per annum from
the Limited Liability Company are due December 1, 1997. Note principal and
interest of 15% per annum from other members are due January 31, 1999. At June
30, 1997, the aggregate of the notes receivable and accrued interest was
$818,090.

The Company is guarantor on a $10,000,000 two year line of credit dated July
29, 1996 in conjunction with the investment.

NOTE B--TRANSACTIONS WITH MARINE MIDLAND BANK

Marine holds back, in a Reserve Account, 10% of the principal balance of the
notes so purchased, to provide additional security in case of default. The
Company has the right to receive the amount by which the Reserve Account
exceeds 15% of the remaining principal balance of the notes owned by Marine on
July 30th of each year. At June 30, 1997, Marine owned 671 notes which were
sold to Marine by the Company, with a principal balance of $2,112,155. The
Reserve Account balance of $330,858 was 15.67% of that amount.

The Agreement also requires Marine to pay the Company monthly an Interest
Differential between the interest earned on the notes and a Minimum Required
Yield established by Marine at the time the note was purchased by Marine. At
June 30, 1997, the aggregate Interest Differential to be paid over four years
on the 671 notes was $151,280. The actual amount of Interest Differential that
will be received by the Company is dependent upon the performance of the
portfolio and the amount of early payoffs of the notes. Due to the inherent
uncertainty of the future value of the Differential, no asset is recorded at
the time of sale; consequently, the monthly Interest Differential is recorded
as income when earned. During the three months ended June 30, 1997 and 1996,
the Company earned $28,000 and $51,000 of Interest Differential, respectively.

F-41

On December 2, 1996, Marine agreed to provide a $7,500,000 Term Loan
("Loan") to the Company for four years. Under its provisions, Marine will
advance 85% of the principal amount of all notes pledged on the Loan. Interest
on the Loan is computed at 2% over Marine's Prime Rate (10.5% at June 30,
1997). All payments from the collateralized notes go directly to Marine, and
monthly interest charges are added to the Loan balance. The Company and its
shareholders have agreed to pay Marine 85% of the outstanding principal
balance of any pledged note that is more than sixty days delinquent. At June
30, 1997, the Company owed $3,717,109 to Marine and had pledged notes with an
aggregate principal balance of $5,180,991. The Company has the option to lock-
in its interest rate under this loan. At June 30, 1997, $773,697 of the
outstanding loan balance had a fixed interest rate of 8.78%, and $1,286,415
had a fixed interest rate of 9.75%.

NOTE C--COMMITMENTS AND CONTINGENCIES

The Company leases its office space under a five year lease dated May 30,
1997. Future required minimum annual rental payments are as follows:

Year Ending June 30, 1998............... $ 98,363
1999............... 105,039
2000............... 108,531
2001............... 112,022
2002............... 105,611

F-42

SUCCESS DEVELOPMENTS, L.L.C.

AUDITED FINANCIAL STATEMENTS

FROM JUNE 10, 1996 (DATE OF INCEPTION) TO DECEMBER 31, 1996

F-43

INDEPENDENT AUDITORS' REPORT

To the Members
Success Developments, L.L.C.
Denver, Colorado

We have audited the accompanying balance sheet of Success Developments,
L.L.C. as of December 31, 1996, and the related statements of operations and
members' equity and cash flows for the period from June 10, 1996 (Date of
Inception) to December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit 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 audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Success Developments,
L.L.C. as of December 31, 1996, and the results of its operations and its cash
flows for the period then ended, in conformity with generally accepted
accounting principles.

KREISMAN CORPORATION

Denver, Colorado
March 5, 1997

F-44

SUCCESS DEVELOPMENTS, L.L.C.

BALANCE SHEET
DECEMBER 31, 1996

(SEE INDEPENDENT AUDITORS' REPORT)

ASSETS

Cash and Cash Equivalents $ 77,540
Due From Members--Note H 4,375
Timeshare Notes Receivable, Less Allowance for Doubtful Notes of
$18,452--Note D 856,086
Inventory--Timeshare Units--Note D 4,089,124
Prepaid Expenses and Other Assets 172,927
Leasehold Improvements, Less Accumulated Amortization of $32,603 117,260
Furniture and Equipment, Less Accumulated Depreciation of $6,214 30,329
----------
Total Assets $5,347,641
==========

LIABILITIES AND MEMBERS' EQUITY

Liabilities
Accounts Payable $ 109,771
Customer Deposits 16,637
Note Payable to Heller Financial--Note D 3,922,999
Other Liabilities 11,259
Due to Managing Member--Note H 187,825
----------
Total Liabilities 4,248,491
Members' Equity--Note C 1,099,150
----------
Total Liabilities and Members' Equity $5,347,641
==========

See Notes to Financial Statements.

F-45

SUCCESS DEVELOPMENTS, L.L.C.

STATEMENT OF OPERATIONS AND MEMBERS' EQUITY

FROM JUNE 10, 1996 (DATE OF INCEPTION) TO DECEMBER 31, 1996

(SEE INDEPENDENT AUDITORS' REPORT)

Revenues
Sales--Timeshare Units............................................ $1,104,620
Other Revenue..................................................... 9,297
----------
1,113,917
Cost of Sales
Timeshare Units Sold.............................................. 283,050
Closing Costs..................................................... 30,432
----------
313,482
----------
Gross Profit.................................................... 800,435
Other Expenses
Sales and Marketing............................................... 570,928
Financing Costs................................................... 199,479
Association Subsidies--Note F..................................... 24,084
Development Costs--Abandoned Project.............................. 10,000
General and Administrative........................................ 146,794
----------
951,285
----------
Net Loss........................................................ (150,850)
Members' Equity at June 10, 1996.................................... -0-
Members' Contributions.............................................. 1,250,000
----------
Ending Members' Equity.......................................... $1,099,150
==========

See Notes to Financial Statements.

F-46

SUCCESS DEVELOPMENTS, L.L.C.

STATEMENT OF CASH FLOWS

FROM JUNE 10, 1996 (DATE OF INCEPTION) TO DECEMBER 31, 1996

(SEE INDEPENDENT AUDITORS' REPORT)

Cash Flows from Operating Activities
Net Loss........................................................ $ (150,850)
Adjustments to Reconcile Net Loss to Cash Used By Operating
Activities:
Depreciation and Amortization................................. 71,282
Reserve for Bad Debts......................................... 18,452
Completed Timeshare Units Sold................................ 283,050
(Increase) Decrease In:
Due From Members............................................ (4,375)
Prepaid Expenses and Other Assets........................... (49,556)
Increase (Decrease) In:
Customer Deposits........................................... 16,637
Other Liabilities........................................... 11,259
-----------
Total Adjustments......................................... 346,749
-----------
Cash Generated by Operating Activities............................ 195,899
-----------
Cash Flows from Investing Activities
Additions To Property, Equipment and Leasehold Improvements..... (186,406)
Timeshare Notes Receivable...................................... (874,538)
Inventory--Timeshare Units...................................... (4,372,174)
Accounts Payable as Related to Inventory........................ 109,771
-----------
Cash Used by Investing Activities................................. (5,323,347)
-----------
Cash Flows from Financing Activities
Loan from Heller Financial...................................... 4,237,575
Payments to Heller Financial.................................... (314,576)
Loan Acquisition Costs.......................................... (155,836)
Member Loans.................................................... 187,825
Contributions of Capital........................................ 1,250,000
-----------
Cash Provided by Financing Activities............................. 5,204,988
-----------
Net Increase in Cash.............................................. 77,540
Cash and Equivalents
Beginning of Period............................................. -0-
-----------
End of Period................................................... $ 77,540
===========
Supplemental Cash Flow Disclosures:
Interest Paid................................................... $ 151,591
===========

See Notes to Financial Statements.

F-47

SUCCESS DEVELOPMENTS, L.L.C.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1996

(SEE INDEPENDENT AUDITORS' REPORT)

NOTE A--THE COMPANY

Success Developments, L.L.C. (the "Company"), is the owner and developer of
Villas of Cave Creek, a timeshare project that contains 25 condominium units.
The Company is in the process of selling the remaining unsold timeshare
interests. The Company is an Arizona Limited Liability Company, organized on
June 10, 1996.

The Company is owned 50% by the managing member Points of Colorado, Inc. and
50% by three individuals who own and operate the company responsible for the
sales and marketing of the timeshare units.

The Company has a finite life, and unless terminated earlier, will cease to
exist fifty years after the date of filing with the state. According to the
laws of the state of Arizona, no member of the limited liability company is
personally liable for any debts or losses of the Company beyond the capital
contribution made by that member.

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Estimates

Cash and Cash Equivalents

Cash and cash equivalents include cash in the bank.

Inventory--Timeshare Units

Timeshare inventory is valued at the lower of cost to acquire, develop, and
renovate the project or market. Cost of timeshare units sold is based upon the
combined costs of Villas of Cave Creek inventory allocated to each week.

Allowance for Doubtful Notes

The Company provides an allowance for doubtful notes for those notes held by
the Company, based on a review of the current status of existing receivables
and historical collection experience within the industry.

Property and Equipment

Furniture and Equipment......................... 5-7 years
Leasehold Improvements.......................... 23 months (term of lease)

F-48

SUCCESS DEVELOPMENTS, L.L.C.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

of the cost and the accumulated depreciation account is charged with
depreciation taken prior to the sale, and any resultant gain or loss is
credited or charged to earnings.

Revenue and Cost Recognition

Revenue from timeshares is recognized upon closing of the sale. Acquisition
and other direct costs and indirect costs related to acquisition and
development of timeshare units are capitalized. Capitalized costs are
allocated to individual timeshare units. The capitalized costs of units are
charged to earnings when the related revenue is recognized. Selling and
administrative costs are charged to earnings when incurred.

Concentration of Credit Risk

NOTE C--MEMBERS' EQUITY

The two classes of members are manager and nonmanager. There is no
difference in interests, rights, preferences, and privileges. Equity by class
at December 31, 1996 was as follows:

Managing member................................................ $ 549,575
Nonmanaging members............................................ 549,575
----------
Total Members' Equity........................................ $1,099,150
==========

NOTE D--TRANSACTIONS WITH HELLER FINANCIAL

On July 29, 1996, Heller Financial agreed to provide a $10,000,000 loan to
the Company for two years (due on July 28, 1998) of which $3,500,000 was
allocated to the acquisition of Villas of Cave Creek. Interest on the
acquisition portion of the note is variable, and at December 31, 1996 was
10.28%. The Agreement requires the Company to maintain a net worth of
$1,000,000 until 90% of the Interval Units are sold, and to pledge as
collateral all Interval Units at Villas at Cave Creek which have not been
sold. Under the provisions, the principal is paid when Interval Units are
sold, in the amount of $3,365 for Whole Interval Units and $1,685 for Biennial
Interval Units. All members have personally guaranteed the note.

The majority of timeshare week sales are financed by notes secured by the
weeks purchased. All of the timeshare notes are pledged on the Heller loan.
Heller advances 87.5% of the principal amount of all timeshare notes. Interest
on the pledged notes is variable, and at December 31, 1996 was 9.78%. All
payments from the collateralized notes go directly to Heller, and monthly
interest charges are added to the loan balance.

NOTE E--LEASES

The Company leases its sales facility under a lease expiring June 30, 1997,
which requires an annual rental fee of $36,000. On or before April 30, 1997,
the Company has the option to extend the lease term to June 30, 1998.

Future minimum rental payments required under the operating lease as of
December 31, 1996 are $18,000 for the year ending December 31, 1997. Total
rental expense for the Company, after reimbursements (see Note H) was $9,200.

F-49

SUCCESS DEVELOPMENTS, L.L.C.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE F--ASSOCIATION SUBSIDY

As developer, the Company is required to subsidize the Association for the
cost of operating and maintaining the resort to the extent assessments
received from the timeshare owners fall short of the Association's financial
requirements. During the year ended December 31, 1996, the Company provided
subsidies of $24,084 to the Association.

NOTE G--INCOME TAXES

The Company is classified as a partnership for federal and state income tax
purposes. The Company's net income or loss is allocated among the members in
accordance with the operating agreement. Consequently, a provision for federal
and state income taxes has not been included in the Company's financial
statements.

NOTE H--RELATED PARTY TRANSACTIONS

The Company paid $498,839 for sales commissions to an Arizona company owned
and operated by three members. The Arizona company will reimburse the Company
for the lease expense for the sales facility during the period of sales
operations. At December 31, 1996, the Arizona organization owed the Company
$4,375 for sales expenses.

The Company paid or accrued $60,000 for management services provided by
Points of Colorado, Inc.

NOTE I--DEVELOPMENT STAGE

Although the Company is now in full operation, it was in the development
stage during a portion of the year ended December 31, 1996.

F-50

SUCCESS DEVELOPMENTS, L.L.C.

BALANCE SHEET

JUNE 30, 1997

ASSETS
------ (UNAUDITED)

Cash and Cash Equivalents......................................... $ 79,556
Due From Members.................................................. 7,875
Timeshare Notes Receivable, Less Allowance for Doubtful Notes of
$109,088......................................................... 4,536,029
Inventory--Timeshare Units........................................ 3,292,799
Prepaid Expenses and Other Assets................................. 340,075
Leasehold Improvements, Less Accumulated Amortization of $76,157.. 108,404
Furniture and Equipment, Less Accumulated Depreciation of
$11,667.......................................................... 38,358
----------
Total Assets.................................................. $8,403,096
==========

LIABILITIES AND MEMBERS' EQUITY
-------------------------------

Liabilities
Accounts Payable................................................ $ 150,569
Customer Deposits............................................... 55,503
Note Payable to Heller Financial................................ 5,915,163
Other Liabilities............................................... 14,622
Due to Managing Member.......................................... 391,527
----------
Total Liabilities............................................. 6,527,384
Members' Equity................................................... 1,875,712
----------
Total Liabilities and Members' Equity......................... $8,403,096
==========

See Notes to Financial Statements.

F-51

SUCCESS DEVELOPMENTS, L.L.C.

STATEMENT OF OPERATIONS AND MEMBERS' EQUITY

FOR SIX MONTHS ENDED JUNE 30, 1997

(UNAUDITED)

Revenues
Sales--Timeshare Units............................................ $5,486,812
Cost of Sales.......................................................
Timeshare Units Sold.............................................. 1,453,614
Closing Costs..................................................... 146,657
----------
1,600,271
----------
Gross Profit.................................................... 3,886,541
Other Expenses
Sales and Marketing............................................... 2,549,911
Financing Costs--Net of Interest Income--$181,314................. 238,366
Association Subsidies--Note F..................................... 82,872
Development Costs--Abandoned Project.............................. 13,050
General and Administrative........................................ 225,780
----------
3,109,979
----------
Net Income...................................................... 776,562
Beginning Members' Equity........................................... 1,099,150
----------
Ending Members' Equity.......................................... $1,875,712
==========

See Notes to Financial Statements.

F-52

SUCCESS DEVELOPMENTS, L.L.C.

STATEMENT OF CASH FLOWS

FOR SIX MONTHS ENDED JUNE 30, 1997

(UNAUDITED)

Cash Flows from Operating Activities
Net Income...................................................... $ 776,562
Adjustments to Reconcile Net Loss to Cash Used By Operating
Activities:
Depreciation and Amortization................................. 87,707
Reserve for Bad Debts......................................... 90,636
(Increase) Decrease In:
Inventory--Timeshare Units.................................. 796,325
Due From Members............................................ (3,500)
Prepaid Expenses and Other Assets........................... 9,098
Increase (Decrease) In:
Accounts Payable............................................ 40,798
Customer Deposits........................................... 38,866
Other Liabilities........................................... 3,363
-----------
Total Adjustments......................................... 1,063,293
-----------
Cash Generated by Operating Activities............................ 1,839,855
-----------
Cash Flows from Investing Activities
Additions To Property, Equipment and Leasehold Improvements..... (48,180)
Origination of Timeshare Notes.................................. (4,531,792)
Real Estate Deposits............................................ (214,946)
Principal Reductions of Timeshare Notes......................... 761,213
-----------
Cash Used by Investing Activities................................. (4,033,705)
-----------
Cash Flows from Financing Activities
Loan from Heller Financial...................................... 3,853,601
Payments to Heller Financial.................................... (1,861,437)
Member Loans.................................................... 203,702
-----------
Cash Provided by Financing Activities............................. 2,195,866
-----------
Net Increase in Cash.............................................. 2,016
Cash and Equivalents
Beginning of Period............................................. 77,540
-----------
End of Period................................................... $ 79,556
===========
Supplemental Cash Flow Disclosures:
Interest Paid................................................... $ 281,249
===========

See Notes to Financial Statements.

F-53

SUCCESS DEVELOPMENTS, L.L.C.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 1997
(UNAUDITED)

NOTE A--MEMBERS' EQUITY

The two classes of members are manager and nonmanager. There is no
difference in interests, rights, preferences, and privileges. Equity by class
at June 30, 1997 was as follows:

Managing member............................................... $ 937,856
Nonmanaging members........................................... 937,856
-----------
Total Members' Equity....................................... $ 1,875,712
===========

NOTE B--TRANSACTIONS WITH HELLER FINANCIAL

On July 29, 1996, Heller Financial agreed to provide a $10,000,000 loan to
the Company for two years (due on July 28, 1998) of which $3,500,000 was
allocated to the acquisition of Villas of Cave Creek. Interest on the
acquisition portion of the note is variable, and at June 30, 1997 was 10.56%.
The Agreement requires the Company to maintain a net worth of $1,000,000 until
90% of the Interval Units are sold, and to pledge as collateral all Interval
Units at Villas at Cave Creek which have not been sold. Under the provisions,
the principal is paid when Interval Units are sold, in the amount of $3,365
for Whole Interval Units and $1,685 for Biennial Interval Units. All members
have personally guaranteed the note.

The majority of timeshare week sales are financed by notes secured by the
weeks purchased. All of the timeshare notes are pledged on the Heller loan.
Heller advances 87.5% of the principal amount of all timeshare notes. Interest
on the pledged notes is variable, and at June 30, 1997 was 10.06%. All
payments from the collateralized notes go directly to Heller, and monthly
interest charges are added to the loan balance.

NOTE C--LEASES

The Company leases its sales facility under a lease expiring June 30, 1998,
which requires an annual rental fee of $36,000. Lease payments are made by an
Arizona company owned and operated by three members (see Note D).

Total rental expense for the Company was $13,459.

NOTE D--RELATED PARTY TRANSACTIONS

The Company paid $2,470,901 for sales commissions to an Arizona company
owned and operated by three members. The Arizona company also pays for the
lease for the sales facility. At June 30, 1997, the Arizona organization owed
the Company $7,875 for sales expenses.

The Company paid or accrued $90,000 for management services provided by
Points of Colorado, Inc.

F-54

COMBINED FINANCIAL STATEMENTS

THE SUCCESS COMPANIES

Years ended March 31, 1996 and 1997
with Report of Independent Certified Public Accountants
and three months ended June 30, 1997

F-55

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
The Success Companies

We have audited the accompanying combined balance sheets of The Success
Companies (the Companies) as of March 31, 1996 and 1997, and the related
combined statements of operations, changes in equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Companies' management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of The Success
Companies at March 31, 1996 and 1997, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.

Ernst & Young LLP

Miami, Florida
August 27, 1997

F-56

THE SUCCESS COMPANIES

COMBINED BALANCE SHEETS

MARCH 31,
--------------------- JUNE 30,
ASSETS 1996 1997 1997
------ --------- ---------- -----------
(UNAUDITED)

Current assets:
Cash..................................... $ 84,098 $ 198,311 $ 195,226
Accounts receivable...................... 214,564 804,537 642,373
Due from affiliates...................... 9,501 60,150 55,633
Inventory of vacation ownership
intervals............................... -- 33,267 32,383
Prepaid expenses and other assets........ 29,713 89,760 104,910
--------- ---------- ----------
Total current assets................... 337,876 1,186,025 1,030,525
Property and equipment, net of accumulated
depreciation of $55,195, $93,416 and
$118,000 at March 31, 1996 and 1997 and
June 30, 1997, respectively............... 130,272 229,087 237,225
Deferred income taxes...................... 16,048 48,158 48,158
Other assets............................... 14,087 32,041 29,849
--------- ---------- ----------
Total assets........................... $ 498,283 $1,495,311 $1,345,757
========= ========== ==========

LIABILITIES AND EQUITY
----------------------

Current liabilities:
Current portion of long-term debt........ $ 58,049 $ 66,511 $ 63,224
Notes payable to affiliates.............. 160,000 280,000 230,000
Accounts payable......................... 66,146 57,795 55,040
Accrued expenses......................... 202,794 650,185 587,533
Due to affiliates........................ 326,947 327,271 298,642
--------- ---------- ----------
Total current liabilities.............. 813,936 1,381,762 1,234,439
Long-term debt, net of current portion..... 10,589 26,669 24,827
Commitments and contingencies
Equity:
Common stock, no par value, 52,500 shares
authorized; 9,500 shares issued and
outstanding............................. 24,000 24,000 24,000
Due from officers for stock purchase..... (24,000) (24,000) (24,000)
Partners' capital/(deficit) retained
earnings................................ (326,242) 86,880 86,491
--------- ---------- ----------
Total equity........................... (326,242) 86,880 86,491
--------- ---------- ----------
Total liabilities and equity........... $ 498,283 $1,495,311 $1,345,757
========= ========== ==========

See accompanying notes.

F-57

THE SUCCESS COMPANIES

COMBINED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED
YEAR ENDED MARCH 31, JUNE 30,
----------------------- ---------------------
1996 1997 1996 1997
----------- ---------- ---------- ----------
(UNAUDITED)

Revenues:
Commissions................. $ 4,288,886 $7,973,693 $1,477,104 $2,556,806
Interest income............. 10,550 5,161 871 1,650
Other....................... 225,489 461,726 92,880 57,195
----------- ---------- ---------- ----------
4,524,925 8,440,580 1,570,855 2,615,651
Expenses:
Selling expenses............ 1,675,328 2,785,844 490,990 808,837
Marketing expenses.......... 2,058,854 3,143,515 526,172 1,109,391
Resort administration....... 801,128 823,611 90,475 178,700
General and administrative
expenses................... 845,036 496,892 97,602 195,421
Fees to affiliates.......... 180,000 726,500 35,000 302,500
Depreciation................ 44,480 50,275 13,020 10,519
Interest expense............ 12,230 34,031 6,595 10,672
----------- ---------- ---------- ----------
5,617,056 8,060,668 1,259,854 2,616,040
----------- ---------- ---------- ----------
(Loss) income before benefit
for income taxes............. (1,092,131) 379,912 311,001 (389)
Benefit for income taxes...... (16,048) (32,110) -- --
----------- ---------- ---------- ----------
Net (loss) income............. $(1,076,083) $ 412,022 $ 311,001 $ (389)
=========== ========== ========== ==========

See accompanying notes.

F-58

THE SUCCESS COMPANIES

COMBINED STATEMENTS OF CHANGES IN EQUITY

PARTNERS'
DUE FROM CAPITAL/
COMMON STOCK OFFICERS (DEFICIT)
-------------- FOR STOCK RETAINED
SHARES AMOUNT PURCHASE EARNINGS TOTAL
------ ------- --------- ----------- -----------

Balance at April 1, 1995.... 1,500 $16,000 $(16,000) $ 63,000 $ 63,000
Common stock
issued/capital
contributions............ 8,000 8,000 (8,000) -- --
Net loss.................. -- -- -- (1,076,083) (1,076,083)
Add net loss related to
uncombined balance sheet
entities................. -- -- -- 686,841 686,841
----- ------- -------- ----------- -----------
Balance at March 31, 1996... 9,500 24,000 (24,000) (326,242) (326,242)
Net income................ -- -- -- 412,022 412,022
Capital contributions..... -- -- -- 1,100 1,100
----- ------- -------- ----------- -----------
Balance at March 31, 1997... 9,500 24,000 (24,000) 86,880 86,880
Net loss (Unaudited)...... -- -- -- (389) (389)
----- ------- -------- ----------- -----------
Balance at June 30, 1997
(Unaudited)................ 9,500 $24,000 $(24,000) $ 86,491 $ 86,491
===== ======= ======== =========== ===========

See accompanying notes.

F-59

THE SUCCESS COMPANIES

COMBINED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED
YEAR ENDED MARCH 31, JUNE 30,
---------------------- -------------------
1996 1997 1996 1997
----------- --------- --------- --------
(UNAUDITED)

Operating activities:
Net (loss) income................ $(1,076,083) $ 412,022 $ 311,001 $ (389)
Adjustments to reconcile net
(loss) income to net cash (used
in) provided by operating
activities:
Depreciation................... 44,480 50,275 13,020 10,519
Net loss related to uncombined
balance sheet entities........ 686,841 -- -- --
Deferred income taxes.......... (16,048) (32,110) -- --
Changes in operating assets and
liabilities:
Accounts receivable.......... (214,564) (589,973) (205,437) 162,164
Due from affiliates.......... (8,187) (50,649) (2,007) 4,517
Inventory of vacation
ownership intervals......... -- (33,267) -- 884
Prepaid expenses and other
assets...................... (17,684) (60,047) (7,278) (15,150)
Other assets................. (7,855) (17,954) (174) 2,192
Accounts payable............. 66,146 (8,351) (32,832) (2,755)
Accrued expenses............. 197,210 447,391 154,313 (62,652)
Due to affiliates............ 326,947 324 54,236 (28,629)
----------- --------- --------- --------
Net cash (used in) provided
by operating activities... (18,797) 117,661 284,842 70,701
Investing activities:
Expenditures for property and
equipment....................... (91,720) (149,090) (1,310) (18,657)
----------- --------- --------- --------
Net cash used in investing
activities...................... (91,720) (149,090) (1,310) (18,657)
Financing activities:
Capital contributions............ -- 1,100 -- --
Proceeds from (repayment of)
notes payable to affiliates..... 100,000 120,000 -- (50,000)
Proceeds from debt............... 74,036 32,591 -- --
Payments on debts................ (5,398) (8,049) (3,224) (5,129)
----------- --------- --------- --------
Net cash provided by (used in)
financing activities............ 168,638 145,642 (3,224) (55,129)
----------- --------- --------- --------
Net increase (decrease) in cash.. 58,121 114,213 280,308 (3,085)
Cash at beginning of period...... 25,977 84,098 84,098 198,311
----------- --------- --------- --------
Cash at end of period............ $ 84,098 $ 198,311 $ 364,406 $195,226
=========== ========= ========= ========
Supplemental disclosure of cash
flow information:
Cash paid during the period for
interest........................ $ 5,476 $ 16,730 $ 2,288 $ 5,370
=========== ========= ========= ========
Cash paid during the period for
taxes........................... $ 33,811 $ -- $ 7,947 $ --
=========== ========= ========= ========

See accompanying notes.

F-60

THE SUCCESS COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

MARCH 31, 1996 AND 1997
JUNE 30, 1997 (UNAUDITED)

1. DESCRIPTION OF BUSINESS AND PRINCIPLES OF COMBINATION

The Success Companies (the Companies) are principally engaged in providing
marketing and sales services of vacation ownership in Colorado and Arizona
under contracts with developers. The Companies have contracts with Success
Developments, LLC, an entity in which the principals of the Companies own a
50% interest, and Points of Colorado, Inc. which owns a 50% interest in
Success Developments, LLC. Additionally, the Companies operate a nationwide
telemarketing center in Phoenix, Arizona. The Companies also provide
management services, market research, lead sales and vacation certificate
sales.

The accompanying combined financial statements include the accounts of The
Success Companies, Inc., Success West Communications, Inc., Data Marketing
Associates, Inc., Success of Colorado, LLC (latest date the LLC can dissolve
is July 25, 2025), Success of Arizona, LLC (latest date the LLC can dissolve
is December 31, 2050), Fiesta Vacations, LLC (latest date the LLC can dissolve
is December 31, 2050), and the operations for the year ended March 31, 1996 of
Success Marketing, Inc. (SMI) and Success Ventures, Inc. (SVI). Fiesta
Vacations began operations on March 1, 1997 but was legally formed on July 16,
1997. Success of Arizona commenced operations in fiscal 1997. All significant
intercompany accounts and transactions have been eliminated in combination.

Subsequent to March 31, 1997, the shareholders/partners have agreed to sell
The Success Companies to Vistana, Inc. (Vistana). Pursuant to the Purchase and
Sales Agreement, Vistana will acquire the stock of The Success Companies,
Inc., Success West Communications, Inc., Data Marketing Associates, Inc.,
Success of Colorado, LLC, Success of Arizona, LLC, and Fiesta Vacations, LLC.
SMI and SVI are currently inactive and are not part of the Purchase and Sales
Agreement. However, for the year ended March 31, 1996, the operations of SMI
and SVI were significant in relation to the combined operations. Accordingly,
the results of operations for SMI and SVI for the year ended March 31, 1996
have been included in the accompanying combined financial statements; however,
the related combined balance sheets of these entities at March 31, 1996 and
1997 and June 30, 1997 have not been included in the accompanying balance
sheets.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Property and Equipment

Property and equipment are recorded at cost and includes furniture, fixtures
and equipment, tenant improvements, vehicles and marketing booths.
Depreciation is recorded using the straight-line method applied to the cost of
the assets over their estimated useful lives of five to seven years.

Revenue Recognition

Commission income is recognized on the accrual basis after a binding sales
contract has been executed, a 10 percent minimum down payment has been
received, the recision period has expired and all credit underwriting
standards have been met. Commission income is based on sales of $10,120,345,
$16,876,395, $3,005,729 and $5,410,747 for the years ended March 31, 1996 and
1997 and the three months ended June 30, 1996 and 1997, respectively.

Income Taxes

Income taxes have been provided using the liability method in accordance
with Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes. Under

F-61

THE SUCCESS COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

Statement No. 109, the liability method is used in accounting for income taxes
where deferred income tax assets and liabilities are determined based on
differences between financial reporting and tax basis of assets and
liabilities and are measured using the enacted tax rates and laws that are
expected to be in effect when the differences reverse.

Advertising Costs

The Companies expense advertising costs as incurred. Advertising expense,
included in marketing expense in the accompanying statements of operations,
were $647,975, $1,145,415, $184,292 and $323,232 for the years ended March 31,
1996 and 1997 and the three months ended June 30, 1996, and 1997,
respectively.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Accordingly, actual results could differ from those
reported.

3. INVENTORY OF VACATION OWNERSHIP INTERVALS

On March 25, 1997, the Companies entered into a marketing agreement with a
developer whereby the developer reserved 50 vacation ownership intervals of
their resort inventory for the Companies for $25,000 plus closing fees. The
Companies have the right to sell the reserved inventory for six months and are
entitled to the proceeds net of any closing and marketing costs associated
with the sales.

Subsequent to March 31, 1997, the Companies acquired the intervals from the
developer.

4. DUE FROM/TO AFFILIATES

Due from affiliates represents advances to officers or shareholders of the
Companies and receivables from affiliated entities. Due to affiliates
represents net advances from affiliated entities. Such advances are
noninterest bearing.

5. DEBT

MARCH 31
---------------
1996 1997
------- -------

$50,000 line of credit, interest payable monthly at
prime plus 2% (10.25% and 11.25% at March 31, 1996 and
1997, respectively), due on March 31, 1998 guaranteed
by the shareholders and officers of the Companies...... $50,000 $50,000
Tenant improvement loan, interest at 10% per annum,
payable in monthly principal and interest installments
of $666 through November 2001, at which time the
principal balance and accrued interest is due.......... -- 32,591
Other notes payable..................................... 18,638 10,589
------- -------
68,638 93,180
Less current portion.................................... 58,049 66,511
------- -------
$10,589 $26,669
======= =======

F-62

THE SUCCESS COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

Scheduled principal maturities of line of credit, loans and notes payable
are as follows:

Year ending March 31
1998.............................................................. $66,511
1999.............................................................. 8,242
2000.............................................................. 6,471
2001.............................................................. 7,148
2002.............................................................. 4,808
-------
$93,180
=======

6. RELATED PARTY TRANSACTIONS

Notes payable to affiliates consist of the following:

MARCH 31,
----------------- JUNE 30,
1996 1997 1997
-------- -------- -----------
(UNAUDITED)

Notes payable to shareholders, interest
only, at 12% per annum, payable monthly
through September 30, 1997, at which
time the principal balance is due....... $100,000 $200,000 $150,000
Note payable to Strategic Alliance
Marketing, Inc., a related party,
interest only, at 12% per annum, payable
monthly through September 30, 1997, at
which time the principal balance is
due..................................... -- 20,000 20,000
Note payable to Success Marketing, Inc.,
interest at 7% per annum................ 60,000 60,000 60,000
-------- -------- --------
$160,000 $280,000 $230,000
======== ======== ========

The note payable to Success Marketing, Inc. is contractually payable in
monthly installments of principal and interest of $1,168 through August 1999.
No payments of principal and interest have been made on the note to date. The
parties intend to settle the note when the Purchase and Sales Agreement
becomes effective. See Note 1.

The Companies paid consulting fees of $180,000, $666,500, $35,000 and
$262,500 for the years ended March 31, 1996 and 1997 and for the three months
ended June 30, 1996 and 1997, respectively, to affiliates and is included in
fees to affiliates expense in the accompanying statements of operations.

Management fees of $60,000 and $40,000 were paid to an affiliate for the
year ended March 31, 1997 and for the three months ended June 30, 1997,
respectively, and is included in fees to affiliates expense in the
accompanying statements of operations.

The Companies received management fees of $30,000 during the year ended
March 31, 1997 from an affiliate and is included in other income in the
accompanying statements of operations.

Substantially all commission income represents amounts earned from entities
in which one or more of the principals of the Companies have common ownership
interests.

F-63

THE SUCCESS COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

7. LEASES

The Company leases office space and equipment under operating leases
expiring in various years through 2002. Minimum future rentals to be paid
under noncancelable leases with original lease terms greater than one year as
of March 31, 1997 for each of the next five years and in the aggregate are as
follows:

Year ending March 31
1998........................................................... $ 240,431
1999........................................................... 215,691
2000........................................................... 211,818
2001........................................................... 214,700
2002........................................................... 141,200
----------
$1,023,840
==========

Rental expense under these leases was $870, $81,933, $570 and $59,392 for
the years ended March 31, 1996 and 1997 and for the three months ended June
30, 1996 and 1997, respectively.

8. INCOME TAXES

At March 31, 1996 and 1997, the Companies have net operating loss
carryforwards of approximately $58,046 and $152,486, respectively, that expire
in 2011. The use of a significant portion of these net operating loss
carryforwards may be restricted under Section 382 of the Internal Revenue
Code.

The components of the benefit for income taxes are as follows:

YEAR ENDED MARCH THREE MONTHS
31 ENDED JUNE 30,
------------------ ---------------
1996 1997 1996 1997
-------- -------- ------- -------
(UNAUDITED)

Deferred federal...................... $(16,048) $(32,110) $ -- $ --
======== ======== ======= =======

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The net deferred tax
asset at March 31, 1996 and 1997 and is comprised of net operating losses.

The differences between the actual income tax benefit and income taxes
computed by applying the statutory federal income tax rate to loss before
income taxes as follows:

MARCH 31
-------------------
1996 1997
--------- --------

Amount at statutory federal rate.................... $ (17,105) $(40,870)
Meal and entertainment.............................. 1,057 1,095
NOL utilization..................................... -- 7,665
--------- --------
$(16,048) $(32,110)
========= ========

No taxes have been provided on income from the limited liability companies
owned by the partners. However, such income is included in the combined
statements of operations for the years ended March 31, 1996 and 1997 and for
the three months ended June 30, 1996 and 1997.

F-64

THE SUCCESS COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

9. COMMITMENTS AND CONTINGENCIES

Commissions earned and received on vacation ownership sales are subject to
commission refunds in the event of default by the purchaser and are calculated
based on a formula as defined in the Marketing and Sales Agreements.
Accordingly, included in accrued liabilities at March 31, 1996 and 1997 and
June 30, 1997 is a reserve for commission refunds of $8,586, $42,239 and
$42,602, respectively.

On July 17, 1995, the Companies entered into an agreement with a contractor
for consulting services relating to generation and/or sale of qualified leads.
Under the agreement, in addition to a base compensation, the contractor was
entitled to 25 percent of the actual collected net proceeds on the sale of
lists or leads. Bonus payments were $32,425, $25,779 and $13,434 for the years
ended March 31, 1996 and 1997, and for the three months ended June 30, 1996,
respectively, and are included in marketing expense in the accompanying
statements of operations. The agreement was terminated on December 31, 1996.

The Success Companies, Inc. is a guarantor of a credit facility with Heller
Financial, Inc. on behalf of Success Development, LLC. Such credit facility
effected on May 20, 1996 consists of a $3.1 million revolving credit
acquisition loan piece and a $10 million receivable loan; however, the
aggregate of the two pieces may not exceed $10 million at any one point in
time. The acquisition loan is secured by a first priority mortgage lien and
security interest in the Villas at Cave Creek Resort. The receivable loan is
secured by a first priority lien and security interest to all notes receivable
assigned to Heller Financial, Inc. and any related accounts and proceeds. The
amount outstanding on the loans at March 31, 1997 and June 30, 1997 is
$4,933,243 and $5,883,847, respectively.

A claim for breach of contract has been asserted by a landlord of the
Companies claiming reimbursement in the amount of $55,361 for costs of tenant
improvements, which costs are payable ratably over the life of the lease
pursuant to the lease agreement. The Companies dispute the claims in part on
the basis that they were not given the opportunity to review and approve the
expenditures. The parties have agreed to submit the matter to arbitration.
Based on the information currently available to them, the Companies believe
that they have strong defenses to the complaint and intend to pursue those
defenses vigorously.

10. CLAIMS FOR COMMISSIONS EARNED

SMI and SVI have asserted claims against All Season Resorts, Inc. (ASR) for
commissions earned of approximately $1,080,000 during the year ended March 31,
1996 pursuant to specific sales and marketing agreements for services provided
to ASR.

No amounts related to this matter have been recorded in the accompanying
statement of operations for the year ended March 31, 1996.

Additional claims have been asserted by SMI and SVI against ASR for breach
of contract, promissory fraud and fraud. ASR has asserted a counterclaim for
damages. There has been no formal discovery in the case and there is no
pending trial date.

The court has granted SMI's Motion to Compel Arbitration and a preliminary
hearing has been scheduled for September 30, 1997. SMI seeks to recover
damages from ASR for ASR's failure and refusal to pay commissions for
marketing services rendered prior to termination of the existing sales and
marketing agreement and, also, for the sixty day termination period for which
SMI was denied the opportunity to market vacation intervals on behalf of ASR.

Based on management's interpretation of the specific sales and marketing
agreements and ASR's ability to pay, management believes it will prevail in
its claims.

F-65

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

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION 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
UNDERWRITERS. 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............................................................. 13
Use of Proceeds.......................................................... 23
Dividend Policy.......................................................... 23
Price Range of Common Stock.............................................. 23
Capitalization........................................................... 24
Selected Combined Historical Financial Information....................... 25
Pro Forma Combined Financial Information................................. 27
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 31
Business................................................................. 40
Management............................................................... 62
Certain Relationships and Related Transactions........................... 71
Principal Shareholders................................................... 73
Description of Capital Stock............................................. 75
Shares Eligible for Future Sale.......................................... 77
Underwriting............................................................. 79
Legal Matters............................................................ 81
Experts.................................................................. 81
Additional Information................................................... 81
Index to Financial Statements............................................ F-1

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

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

4,000,000 SHARES

LOGO

COMMON STOCK

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

PROSPECTUS

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

MERRILL LYNCH & CO.

NATIONSBANC MONTGOMERY SECURITIES, INC.
LEHMAN BROTHERS
SMITH BARNEY INC.

,1997

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

SUBJECT TO COMPLETION, DATED OCTOBER 17, 1997

4,000,000 SHARES

LOGO

COMMON STOCK

-----------

All of the 4,000,000 shares of common stock, par value $0.01 per share
("Common Stock"), of Vistana, Inc. (the "Company"), offered hereby, are being
sold by the Company. Of the 4,000,000 shares of Common Stock offered hereby,
3,200,000 shares are being offered in a concurrent offering in the United
States and Canada by the U.S. Underwriters (the "U.S. Offering" and, together
with the International Offering, the "Offering"). The price to public and
underwriting discount per share are identical for the International Offering
and the U.S. Offering. The Common Stock is listed for quotation on the Nasdaq
National Market under the symbol "VSTN." On October 15, 1997, the last reported
sale price of the Common Stock was $26 1/8 per share. See "Price Range of
Common Stock."

SEE "RISK FACTORS" COMMENCING ON PAGE 13 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK OFFERED HEREBY.

-----------

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

UNDERWRITING
PRICE TO DISCOUNTS PROCEEDS TO
PUBLIC AND COMMISSIONS(1) COMPANY(2)
- ---------------------------------------------------------------------------

(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted the several International Managers and U.S.
Underwriters (the "Underwriters") options to purchase up to 120,000 and
480,000 additional shares, respectively, of Common Stock to cover over-
allotments, if any. See "Underwriting." If such options are exercised in
full, the total Price to Public, Underwriting Discount and Proceeds to
Company will be $ , $ and $ , respectively.

-----------

MERRILL LYNCH INTERNATIONAL NATIONSBANC MONTGOMERY SECURITIES, INC.
LEHMAN BROTHERS
SMITH BARNEY INC.

-----------

The date of this Prospectus is November , 1997

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
UNDERWRITING

Subject to the terms and conditions contained in an international purchase
agreement (the "International Purchase Agreement"), the Company has agreed to
sell to the International Managers named below (the "International Managers"),
and the International Managers, for whom Merrill Lynch International,
NationsBanc Montgomery Securities, Inc., Lehman Brothers Inc. and Smith Barney
Inc. are acting as lead managers (the "Lead Managers"), have severally agreed
to purchase, the number of shares of Common Stock set forth opposite their
respective names below.

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

Merrill Lynch International..................................
NationsBanc Montgomery Securities, Inc.......................
Lehman Brothers Inc..........................................
Smith Barney Inc.............................................
---------
Total.................................................. 1,800,000
=========

The Company has also entered into a purchase agreement (the "U.S. Purchase
Agreement" and, together with the International Purchase Agreement, the
"Agreements") with certain underwriters in the United States and Canada (the
"U.S. Underwriters"), for whom Merrill Lynch, Pierce, Fenner & Smith
Incorporated, NationsBanc Montgomery Securities, Inc., Lehman Brothers Inc.
and Smith Barney Inc. are acting as representatives (the "U.S.
Representatives"). Subject to the terms and conditions set forth in the U.S.
Purchase Agreement, the Company has agreed to sell to the U.S. Underwriters,
and the U.S. Underwriters have severally agreed to purchase, an aggregate of
3,200,000 shares of Common Stock. The public offering price per share and the
underwriting discount per share are identical under the International Purchase
Agreement and the U.S. Purchase Agreement.

In the International Purchase Agreement and the U.S. Purchase Agreement, the
several International Managers and the several U.S. Underwriters
(collectively, the "Underwriters"), respectively, have agreed, subject to the
terms and conditions set forth therein, to purchase all of the shares of
Common Stock being sold pursuant to the Agreements if any of the shares of
Common Stock being sold pursuant to the Agreements are purchased. The
International Purchase Agreement provides that in the event of a default by an
International Manager, the purchase commitments of the non-defaulting
International Managers may in certain circumstances be increased, and the U.S.
Purchase Agreement provides that, in the event of a default by a U.S.
Underwriter, the purchase commitments of the non-defaulting U.S. Underwriters
may in certain circumstances be increased. The closing with respect to the
sale of the shares of Common Stock pursuant to the International Purchase
Agreement is a condition to the closing with respect to the sale of the shares
of Common Stock pursuant to the U.S. Purchase Agreement, and the closing with
respect to the sale of the shares of Common Stock pursuant to the U.S.
Purchase Agreement is a condition to the closing with respect to the sale of
the shares of Common Stock pursuant to the International Purchase Agreement.

The International Managers and the U.S. Underwriters have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") which provides for
the coordination of their activities. Under the terms of the Intersyndicate
Agreement, the International Managers and the U.S. Underwriters are permitted
to sell shares of Common Stock to each other. Pursuant to the Intersyndicate
Agreement, sales may be made between the U.S. Underwriters and the
International Managers of such number of shares of Common Stock as may be
mutually agreed. The price of any shares of Common Stock so sold shall be the
public offering price, less an amount not greater than the selling concession.

Under the terms of the Intersyndicate Agreement, the International Managers
and any dealer to whom they sell shares of Common Stock will agree not to
offer to sell or sell shares of Common Stock to persons whom they believe are
United States Persons or Canadian Persons (as defined in the Intersyndicate
Agreement) or to

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

persons whom they believe intend to reoffer or resell the same to United States
Persons or Canadian Persons, and the U.S. Underwriters and any bank, broker or
dealer to whom they sell shares of Common Stock will agree to offer to sell or
sell shares of Common Stock only to persons whom they believe to be United
States Persons or Canadian Persons or to persons whom they believe intend to
reoffer or resell the same to United States Persons or Canadian Persons, except
in each case for transactions pursuant to the Intersyndicate Agreement which,
among other things, permits the Underwriters to purchase from each other and
offer for resale such number of shares of Common Stock as the selling
Underwriter or Underwriters and the purchasing Underwriter or Underwriters may
agree.

The Lead Managers have advised the Company that the International Managers
propose initially to offer the shares of Common Stock offered hereby to the
public at the pubic offering price set forth on the cover page of this
Prospectus, and to certain dealers at such price less a concession not in
excess of $ per share. The International Managers may allow, and such
dealers may reallow, a discount not in excess of $ per share to certain
other dealers. After the public offering, the public offering price, concession
and discount may be changed.

The Company has granted to the International Managers an option, exercisable
for 30 days after the date hereof, to purchase up to 120,000 additional shares
of Common Stock and to the U.S. Underwriters an option, exercisable for 30 days
after the date hereof, to purchase up to 480,000 additional shares of Common
Stock, in each case solely to cover over-allotments, if any, at the public
offering price less the underwriting discount. To the extent that the
International Managers exercise such option, each of the International Managers
will be obligated, subject to certain conditions, to purchase approximately the
same percentage of such shares which the number of shares of Common Stock to be
purchased by it shown in the foregoing table bears to the total number of
shares of Common Stock set forth in such table.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including certain liabilities under the Securities Act.

The Company has agreed that it will not, with certain exceptions, offer, sell
or otherwise dispose of any shares of Common Stock for a period of days
from the date of this Prospectus without the prior written consent of Merrill
Lynch International, except for the sale of shares pursuant to the over-
allotment option, the issuance of shares upon the exercise of currently
outstanding stock options and pursuant to the Employee Stock Purchase Plan and
the issuance of shares contingently issuable in connection with the
Acquisition. Each of the Principal Shareholders has agreed that, for a period
of days from the date of this Prospectus, he or she will not, without the
prior written consent of Merrill Lynch International, offer, sell or otherwise
voluntarily dispose of any shares of Common Stock or any securities convertible
into or exercisable for Common Stock.

Each of the Company and the International Managers has represented and agreed
that (a) it has not offered or sold, and prior to the date six months after the
date of this Prospectus will not offer or sell any shares of Common Stock to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purchase of their businesses or otherwise in
circumstances which do not constitute an offer to the public in the United
Kingdom for the purposes of the Public Offers of Securities Regulations 1995,
(b) it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to any thing done by it in relation to
the shares of Common Stock, from or otherwise the United Kingdom and (c) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issue or sale of the shares
of Common Stock to a person who is of a kind described in Article II(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom the document may otherwise lawfully be issued or passed
on.

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

If the Underwriters create a short position in the Common Stock in connection
with the Offering (i.e., if they sell more shares of Common Stock than are set
forth on the cover page of this Prospectus), the U.S. Representatives and the
Lead Managers, respectively, may reduce that short position by purchasing
Common Stock in the open market. The U.S. Representatives and the Lead
Managers, respectively, may also elect to reduce any short position through the
exercise of all or part of the over-allotment option described above.

The U.S. Representatives and the Lead Managers, respectively, may also impose
a penalty bid on certain Underwriters and selling group members. This means
that if the U.S. Representatives or the Lead Managers purchase shares of Common
Stock in the open market to reduce the Underwriters' short position or to
stabilize the price of the Common Stock, they may reclaim the amount of the
selling concession from the Underwriters and selling group members who sold
those shares as part of the Offering.

In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the U.S.
Representatives or the Lead Managers will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION 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
UNDERWRITERS. 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
----

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

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

4,000,000 SHARES

LOGO

COMMON STOCK

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

PROSPECTUS

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

MERRILL LYNCH INTERNATIONAL

NATIONSBANC MONTGOMERY SECURITIES, INC.
LEHMAN BROTHERS
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........................................... $ 36,940
NASD filing fee................................................ 12,690
Nasdaq National Market additional listing fee.................. 17,500
Accounting fees and expenses................................... 150,000*
Legal fees and expenses........................................ 200,000*
Printing and engraving expenses................................ 125,000*
Transfer agent and registrar fees.............................. 25,000*
Miscellaneous expenses......................................... 57,870
--------
TOTAL...................................................... $600,000*
========

- --------
*Estimated

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 has purchased 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 has 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 March 1997, the Principal
Shareholders contributed 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 were issued by the Company concurrently with
the completion of the Initial Public Offering in reliance upon an exemption
from the registration requirements of the Securities Act provided by Section
4(2) thereof.

On September 16, 1997, in connection with the Acquisition, the Company
issued (i) 77,421 shares of Common Stock to Larry D. Doll; (ii) 25,807 shares
of Common Stock to David H. Friedman; (iii) 52,202 shares of Common Stock to
Donald J. Dubin; (iv) 26,100 shares of Common Stock to Ronald R. Sharp; and
(v) 26,100 shares of Common Stock to David E. Bruce, together the former
owners of the Acquired Companies. These transactions were effected in reliance
upon the exemption from the registration requirements of the Securities Act
provided by Section 4(2) thereof and/or Regulation D promulgated thereunder.

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.

II-2

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 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 OCTOBER 17, 1997.

Vistana, Inc.

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

WE, THE UNDERSIGNED OFFICERS AND DIRECTORS OF VISTANA, INC., HEREBY
SEVERALLY CONSTITUTE RAYMOND L. GELLEIN, JR., JEFFREY A. ADLER AND SUSAN
WERTH, AND EACH OF THEM SINGLY, OUR TRUE AND LAWFUL ATTORNEYS WITH FULL POWER
TO THEM, AND EACH OF THEM SINGLY, TO SIGN FOR US AND IN OUR NAMES IN THE
CAPACITIES INDICATED BELOW, ANY AND ALL AMENDMENTS, INCLUDING POST-EFFECTIVE
AMENDMENTS, TO THIS REGISTRATION STATEMENT, AND TO SIGN A NEW REGISTRATION
STATEMENT PURSUANT TO RULE 462(B) OF THE SECURITIES ACT OF 1933, AND GENERALLY
TO DO ALL THINGS IN OUR NAME AND BEHALF IN SUCH CAPACITIES TO ENABLE VISTANA,
INC. TO COMPLY WITH THE APPLICABLE PROVISIONS OF THE SECURITIES ACT OF 1933
AND ALL REQUIREMENTS OF THE SECURITIES AND EXCHANGE COMMISSION, AND WE HEREBY
RATIFY AND CONFIRM OUR SIGNATURES AS THEY MAY BE SIGNED BY OUR SAID ATTORNEYS,
OR ANY OF THEM, TO ANY AND ALL SUCH AMENDMENTS OR NEW REGISTRATION STATEMENT.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW ON OCTOBER 17, 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/ John M. Sabin Senior Vice President and Chief
- ------------------------------------- Financial Officer and Treasurer
JOHN M. SABIN (Principal Financial Officer and
Principal Accounting Officer)

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

/s/ Laurence S. Geller Director
- -------------------------------------
LAURENCE S. GELLER

/s/ Charles E. Harris Director
- -------------------------------------
CHARLES E. HARRIS

/s/ Steven J. Heyer Director
- -------------------------------------
STEVEN J. HEYER

II-4

INDEX TO EXHIBITS

EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------- --------------------

1.1* Form of Underwriting Agreement
2.1 Agreement and Plan of Reorganization dated as of August
15, 1997 among Vistana, Inc., V Sub-1, Inc., Donald J.
Dubin, Ronald R. Sharp, David E. Bruce, Larry D. Doll,
and David H. Friedman. Complete 1 and Schedule 1.5A
thereto (incorporated by reference to Exhibit 2.1 to
Registrant's Current Report on Form 8-K dated September
29, 1997 (No. 0-29114))
3.1 Articles of Incorporation of Vistana, Inc. (incorporated
by reference to Exhibit 3.1 to Registrant's Registration
Statement on Form S-1 (No. 333-19045))
3.2 By-Laws of Vistana, Inc. (incorporated by reference to
Exhibit 3.2 to Registrant's Registration Statement on
Form S-1 (No. 333-19045))
4.1 Form of Common Stock certificate of Vistana, Inc.
(incorporated by reference to Exhibit 4.1 to Registrant's
Registration Statement on Form S-1 (No. 333-19045))
5.1 Opinion of Neal, Gerber & Eisenberg, counsel to Vistana,
Inc.
10.1 Employment Agreement, dated as of December 27, 1996,
between Vistana, Inc. and Raymond L. Gellein, Jr.
(incorporated by reference to Exhibit 10.1 to
Registrant's Registration Statement on Form S-1 (No. 333-
19045))
10.2 Employment Agreement, dated as of December 27, 1996,
between Vistana, Inc. and Jeffrey A. Adler (incorporated
by reference to Exhibit 10.2 to Registrant's Registration
Statement on Form S-1 (No. 333-19045))
10.3 Employment Agreement, dated as of December 27, 1996,
between Vistana, Inc. and Matthew E. Avril (incorporated
by reference to Exhibit 10.3 to Registrant's Registration
Statement on Form S-1 (No. 333-19045))
10.4 Employment Agreement, dated as of December 27, 1996,
between Vistana, Inc. and Susan Werth (incorporated by
reference to Exhibit 10.4 to Registrant's Registration
Statement on Form S-1 (No. 333-19045))
10.5 Employment Agreement, dated as of December 27, 1996,
between Vistana, Inc. and Carol Lytle (incorporated by
reference to Exhibit 10.5 to Registrant's Registration
Statement on Form S-1 (No. 333-19045))
10.6 Employment Agreement, dated as of February 10, 1997,
between Vistana, Inc. and John M. Sabin (incorporated by
reference to Exhibit 10.6 to Registrant's Registration
Statement on Form S-1 (No. 333-19045))
10.7 Amended and Restated Subscription Agreement, dated as of
February 10, 1997, among Vistana, Inc. and each of the
persons whose signatures appear on the execution pages
thereof (incorporated by reference to Exhibit 10.7 to
Registrant's Registration Statement on Form S-1 (No. 333-
19045))
10.8 Vistana Stock Plan (incorporated by reference to Exhibit
10.8 to Registrant's Registration Statement on Form S-1
(No. 333-19045))
10.9 Vistana, Inc. Employee Stock Purchase Plan (incorporated
by reference to Exhibit 10.9 to Registrant's Registration
Statement on Form S-1 (No. 333-19045))
10.10 Form of Indemnification Agreement between Vistana, Inc.
and certain officers and directors of Vistana, Inc.
(incorporated by reference to Exhibit 10.10 to
Registrant's Registration Statement on Form S-1 (No. 333-
19045))

- --------
*To be filed by amendment.

EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------- --------------------

10.11 Registration Rights Agreement, dated as of December 27,
1996, among Vistana, Inc., the Raymond L. Gellein, Jr.
Retained Annuity Grantor Trust, the Matthew James Gellein
Irrevocable Trust, the Brett Tyler Gellein Irrevocable
Trust, the Raymond L. Gellein, Jr. Revocable Trust, the
JGG Holdings Trust, the Jeffrey A. Adler Revocable Trust,
Matthew E. Avril, Susan Werth, Carol A. Lytle, John M.
Sabin, Barbara L. Hollkamp, James A. McKnight, William
McLaughlin and Alain Grange (incorporated by reference to
Exhibit 10.11 to Registrant's Registration Statement on
Form S-1 (No. 333-19045))
10.12 Agreement for Affiliation, dated as of May 26, 1995, among
Resort Condominiums International, Inc., Vistana
Development, Ltd., Raymond L. Gellein, Jr. and Jeffrey A.
Adler (incorporated by reference to Exhibit 10.12 to
Registrant's Registration Statement on Form S-1 (No. 333-
19045))
10.13 Limited Partnership Agreement of Vistana WGV, Ltd., dated
as of June 28, 1996, among Vistana WGV Holdings, Inc.,
Vistana WGV Investment, Ltd., United Timeshares, Inc. and
A. Zimand WGV Investment, Inc. (incorporated by reference
to Exhibit 10.13 to Registrant's Registration Statement
on Form S-1 (No. 333-19045))
10.14 Parcel One Property Sale Agreement, dated as of June 4,
1996, By and Between SJH Partnership, Ltd. and Vistana
WGV, Ltd. (incorporated by reference to Exhibit 10.14 to
Registrant's Registration Statement on Form S-1 (No. 333-
19045))
10.15 Amended and Restated Joint Venture Agreement, dated as of
June 25, 1996, among R. Edward Noble, Andrew E. Kidd,
Noble-Kidd Corporation and VCH Oaks, Ltd. (incorporated
by reference to Exhibit 10.15 to Registrant's
Registration Statement on Form S-1 (No. 333-19045))
10.16 Limited Partnership Agreement of VCH Oaks, Ltd., dated as
of June 25, 1996, among VCH Oaks, Inc., R. Edward Noble,
Andrew E. Kidd and Vistana OP Investment, Ltd.
(incorporated by reference to Exhibit 10.16 to
Registrant's Registration Statement on Form S-1 (No. 333-
19045))
10.17 Exclusive Joint Venture Agreement, dated as of December
24, 1996, between Vistana Development, Ltd. and Promus
Hotels, Inc. (incorporated by reference to Exhibit 10.17
to Registrant's Registration Statement on Form S-1 (No.
333-19045))
10.17-A First Amendment to Exclusive Joint Venture Agreement,
dated February 7, 1997, between Vistana Development, Ltd.
and Promus Hotels, Inc. (incorporated by reference to
Exhibit 10.17-A to Registrant's Registration Statement on
Form S-1 (No. 333-19045))
10.17-B Second Amendment to Exclusive Joint Venture Agreement,
dated February 27, 1997 between Vistana Development, Ltd.
and Promus Hotels, Inc.
10.17-C Third Amendment to Exclusive Joint Venture Agreement,
dated May 1, 1997 between Vistana Development, Ltd. and
Promus Hotels, Inc.
10.18 Land Purchase Agreement, dated as of December 30, 1996,
between Myrtle Beach Farms Company, Inc. and Vistana
Myrtle Beach, L.P. (incorporated by reference to Exhibit
10.18 to Registrant's Registration Statement on Form S-1
(No. 333-19045))
10.19 Purchase and Sale Agreement dated as of August 12, 1997 by
and between PGA Golf Development, Inc. and Vistana PSL,
Inc.
10.19-A First Amendment to Purchase and Sale Agreement dated as of
September 12, 1997 by and between PGA Golf Development,
Inc. and Vistana PSL, Inc.
*10.19-B Second Amendment to Purchase and Sale Agreement dated as
of September 17, 1997 by and between PGA Golf
Development, Inc. and Vistana PSL, Inc.
10.20 Affiliation Agreement dated as of September 15, 1997 by
and between PGA Golf Properties, Inc. and Vistana, Inc.
*21.1 List of subsidiaries of Vistana, Inc.

- --------
*To be filed by amendment.

EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------- --------------------

23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Neal, Gerber & Eisenberg (included in Exhibit
5.1)
23.3 Consent of Kreisman Corporation
23.4 Consent of Kreisman Corporation
23.5 Consent of Ernst & Young LLP
24.1 Powers of Attorney (included on signature page)
*27.1 Financial Data Schedule
*99.4 Consent of American Resort Development Association

- --------
*To be filed by amendment.