Halogen Guides Real Estate

Mustique: Island Getaway Adds New Villas

2009-11-20T13:58:36-08:00

Mustique, a private island in the Grenadines recently expanded its offerings, with 10 new villas on the tiny (1,400 acres), exclusive retreat. Thanks to the expansion (and no, it’s nothing like New Village in AMC’s recent series The Prisoner), the Eastern Caribbean island is able to offer 72 designer villas, each with its own distinctive architecture and atmosphere.

The new homes include a seven-bedroom contemporary hilltop villa, offering up panoramic vistas, and an Oliver Messel-inspired villa complete with home movie theater and a 500-film library. Available for weekly rentals ranging from $4,250 to $150,000 per week, each includes a full staff and vehicle in the rental price. Spaces range from two to night bedrooms, providing options for couples, honeymooners, families and multi-generational groups seeking a home away from home.

As another option, The Cotton House is an elegant, West Indian-style plantation home hotel, featuring 17 guest rooms, cottages and suites, 11 of which feature private plunge pools.

For those interested in becoming shareholders or owners of one of the 100 privately-owned villas, contact Roger Pritchard, Managing Director, at 784.488.8000 [MustiqueIsland]

Armani Residences Dubai Opening Delayed Until 2010

2009-11-12T17:38:34-08:00

Homeowners and visitors alike are anxiously awaiting the opening of the Burj Dubai, billed as the world’s tallest tower. Originally scheduled to open in 2008, then for a mid-September 2009 opening, the completion date was pushed back to early December, and most recently to January 4, 2010, according to a spokesperson from the company. One of the “victims” of the delay, Armani Residences Dubai (along with its sister property Armani Hotel Dubai). The luxury residences, the first designed personally by Giorgio Armani, feature Armani’s understated, contemporary stile, with an emphasis on the “compatibility of materials, forms and lighting,” according to the company. “Zones,” rather than rooms are created using panels and rounded partitions in an attempt to redefine concepts of space, with a natural flow from room to room.

A total of 144 one- and two-bedroom suites are available (ranging from about 1,000- to about 2,150-square feet), occupying levels 9 through 16 of the 2,684-foot tower. Furnishings for each room are made to measure, with custom finishes (including stone, zebrawood, Venetian plaster and leather wall coverings), with many pieces available from the Armani/Casa home furnishings line, also designed by Giorgo Armani, according to the company.

Residents have full access to the services offered by the Armani Hotel Dubai (the first in a mini-chain of Armani Hotels around the globe). These include concierge, 24/7 room service, housekeeping, library, spa, gym and swimming ppol. In addition, Armani residents have access to other facilities located within Burj Dubai, including four pools, a cigar club, a library, an exlcusive residents’ lounge, 15,000 square feet of fitness facilities, and a near-rooftop observatory.

According to a release from Armani Residences, the spaces employ the latest in “smart home technology,” from security to control over temperature, lighting, draping and A/C. The exterior of the building is designed to help withstand extreme summer heat with maximum efficiency.

Though the Burj Dubai itself is slated for a January 4 opening, no updated opening date for the Armani Residences has been given. The Burj spokesperson told Halogen the focus is currently on the opening of the building itself.

Interview: Ultimate Escapes CEO Jim Tousignant: "Going Public Isn't Just About Capital"

2009-09-24T13:41:58-07:00

In what Ultimate Escapes CEO Jim Tousignant is calling a “watershed” event, the destination club has signed a definitive agreement to enter into a business combination with the publicly-traded Secure America Acquisition Corporation. It’s anticipated that upon consummation of the business combination, Secure America would change its name to Ultimate Escapes Inc. and potentially become the only organization in the industry with full, public financial disclosure. Secure America is known as a SPAC (“Special Purpose Acquisition Company”), or a “blank check” or “cash shell” company specifically formed purely to acquire other companies. This planned combination would provide UE new equity capital to grow business, and expand their global property portfolio, infrastructure, operations and staff.

Most recently, Ultimate Escapes Holdings, LLC. completed an acquisition of certain assets from Private Escapes Holdings LLC, (whose appraised values total about $50 million) and planted former CEO of PE, Rich Keith, as chairman of its own company.

HalogenLife spoke with Tousignant exclusively to get a firsthand account of what this means for Ultimate Escapes and the destination club market on the whole.

» HalogenLife: Tell us how this merger with Private Escapes came about.
»Tousignant: No doubt the economy has affected every business in the industry. What was once a robust industry is now requiring a new sales scenario. Lots of destination clubs are suffering because of this. The difference with us is that we started to focus on this situation early on, through substantial cost-cutting this year.

» HalogenLife: What did that entail?
»Tousignant: It’s an assessment process, cutting our cost to the bone. For us I think we feel very good because we’ve gone to the bottom and made it to the other side. Last quarter, in late 2008 and early 2009, it was hard. But we feel increasingly bullish. It’s still an evolving market. The good news is between organic sales, the viability of business shows our customers are pleased with what they’re seeing. All 1,200 members are ecstatic. They’ve been looking forward to this deal for over two years.

» HalogenLife: When did these talks come into play? »Tousignant: We first signed the agreement in December of 2007. The economy had a sobering effect and a painful effect on our industry, so we addresed it then.

» HalogenLife: What did that mean in terms of drop-off rates or people petitioning to stop being members?
»Tousignant: The answer is we’ve actually been fortunate. Every club sees periodic turnover. For years we’ve been at a 97-99 percent renewal rate. It was at 99 percent every year, except in 08/09, which was principally due to the economy.

» HalogenLife: And do you anticipate more drop-off?
»Tousignant: If you think about it, we service an affluent customer base. For our premier bronze plan, you can join the club for $70,000. There are 10 million families in our demographic. And they’re going to vacation regardless of the economy. They used to buy multiple second homes. But of course now some of that bloom is off the rose. Even if interested, they may not be able to get it financed. It’s silly to own a home that will cost $200,000 to maintain. And we’re a better option than a luxe hotel. We offer a full house.

» HalogenLife: Tell us about Secure America.
»Tousignant: Secure America is what used to be called a blank check company. At the hottest part of the bull market, in 2006/07, they went public and raised an aggregate bill in new capital expressly to make use of their raised $80 million of capital. Their principal initial charter was with Homeland Security. As the economy turned, mostly government contractors benefited from Secure America. But that’s changed now, too, of course.

» HalogenLife: How? »Tousignant: It diminished over time. Other opportunities included asset plays. Some formed new banks. But there’s been a movement afoot to shift to a different business.

» HalogenLife: Is that where Ultimate Escapes came in?
»Tousignant: It’s a fundamental business growing quickly. It’s underpinning $170 million worth of real estate. It may seem like an odd conversion, but the $80 million capital had to be put to good use. This was a good investment opportunity. We had a meeting of the minds.

» HalogenLife: So how did you address this with your current members?
»Tousignant: We had a member call, which we do every quarter. After the announcement, we had our biggest attendance ever. It was about progress. At that meeting, we discussed the light at the end of the tunnel.

» HalogenLife: So they walked away happy? How did they feel about a company affiliated with Homeland Security joining their club?
»Tousignant: With this deal the charter will be changed to be more generic, and that’s a good thing. Look at technology platforms like Smart Home. They built a lot of technology and provided capabilities to make members feel safe and secure. They offer remote access where people can monitor their assets. Even remote cameras. Now, it’s obviously nothing to do with Homeland Security. But we believe Secure America adds new capability to homes and will increasingly provide members with a feeling of comfort and attention. If we do this right, who’s to say our members won’t say, “What would it take to put this security capability in my home?”

» HalogenLife: What does going public mean to you?
»Tousignant: Going public isn’t just new capital. Public stock as currency enables us to do things we couldn’t do with cash and private stock. Advantage this transaction. In addition to shareholders, warrant holders will benefit. There are 12 million warrants as part of deal. If we deliver over the next three to four years, there will be the incentive to convert them into stock. It’ll be a $100 million return on investment. If we deliver.

» HalogenLife: So you’re feeling the crunch?
»Tousignant: We feel good about where we are. We’re not a club that doesn’t buy properties. This is a new watermark that says, if you want to be in this business, you’d better have attributes. It’s all about trust. We treat our members’ monies with respect.

Where To Break Ground Right Now: Rio (And She Dances On The Sand...)

2009-09-10T17:48:06-07:00

There are more people buying property in foreign countries than ever before. This is a reversal of sorts, of the 1980s and 90s, when foreign tycoons and venture capitalists started investing in American properties. Today, destinations such as Brazil are more popular with U.S. investors than ever before. This new market has a steady economy, low asking prices for property and a rising tourist market.

Recent years have seen an increase in the number of new developments being built in the country, both on the coastal regions and inland. One reason for the recent popularity is that flights to Brazil are not as expensive as they once were, and there are airlines that offer discounted fares to the major cities at lesser rates. Living costs in the country are low in comparison to the UK, America and Europe.

Also, Brazil’s attractiveness stems in part from its emergence as a major innovative power. Brazil is now acknowledged as a promising new destination for investors in property; early investors are already seeing high returns. Luxury properties are somewhat more accessible in Brazil, which is an instant selling point for investors looking for quick returns.

Where to buy

The beaches at Bahia, aided by the balmy, tropical climate, are attracting an increasing number of tourists (nine million last year alone) and development projects. Think of it as the Malibu of Brazil. Sao Paulo is on the threshold of a property boom, as well, as it becomes acknowledged as a city that is hard-working and gains popularity once foreign businesses discover its potential for relocation possibilities. Real estate professionals also forecast that Rio, already a fashionable holiday destination, will experience a substantial growth in development. [Destination 360]

Abercrombie & Kent Dares Members To Vacation To The Extreme

2009-09-08T15:05:10-07:00

The phrase, “Go big or go home,” has been used in all aspects of activity, from sporting events to launching a new business, But when it comes to vacation, the term hasn’t really applied — until now. Abercrombie & Kent’s Extreme Adventures is inviting members to travel like never before. Founder, chairman and chief executive officer Geoffrey Kent said in a release, “We designed these itineraries to provide modern-day adventurers with an opportunity to conquer nature instead of the boardroom — a rare experience that will transform their belief of what is truly possible, of the obstacles they can overcome.”

Some itineraries such as Egypt: Traces of Lost Civilizations are shorter and more focused for limited vacation time while others such as Nepal: Ascent to Everest Base Camp have been lengthened to allow for premium altitude acclimatization and a deeper immersive experience. Here’s a selection of the extreme vacations to consider:

Abercrombie & Kent’s 2010 Extreme Adventures include the following selections:
Desert Expeditions
Egypt – Traces of Lost Civilizations: An 11-day journey with prices starting at $5,975
Jordan – Following in the Steps of Lawrence of Arabia: Eleven days starting at $7,990

Extreme Safaris
Kenya – Uncharted Frontiers: Eleven day safari by vehicle, foot and camelback, starting at $9,955
Tanzania – The Selous on Foot: Eleven day safari starting at $10,899
Zambia – River & Walking Trails: Eleven day safari deep in the bush, starting at $8,390

Mountain Trekking
Mount Kilimanjaro – Lemosho & the Western Branch: Trek on the least-traveled and most scenic route to the summit on this 12-day trip, starting at $6,845
Nepal – Ascent to Everest Base Camp: A 12-day trek to the Mt. Everest base camp at 18,000 feet, starting at $5,590

Men & Machine Extreme
South Africa & Botswana – Seeking the Ultimate Thrill: Twelve day trip starting at $11,950
Antarctica – An Audience with Emperors: Camp within 50 feet of the resting area of up to 3,300 Emperor Penguin chicks. Price to be determined
Norway – Dog Sledding in the Arctic: Mush your own dog sled team in northern Scandinavia. Nine day journey starting at $9,655
Norway – On the Trail of the Polar Bear: Spend four nights in a remote camp on the pack ice, tracking and observing polar bears. Eleven day trip starting at $13,995
The South Pole – Conquering the Final Degree: Ski 70 miles to the South Pole. Price to be determined
Undersea Adventures
Belize – River & Rainforest: Eight day exploration of rainforests by riverboat, ATV and on foot. Eight day program, starting at $6,995
Belize – Diving the Blue Hole: Dive more than 100 feet down to investigate what appears to be a vertical deep hole in the ocean. Six day trip starting at $5,495

Exclusive Resorts Ups The Ante, Increases Membership Dues

2009-09-01T15:53:13-07:00

The waning economy has taken all aspects of luxury living for a spin. It’s done a number of things, not the least of which is causing some people and businesses to fold and some to improvise. Exclusive Resorts represents the latter. The recession has noticeably impacted the level of membership growth (from an average of 800 in years past to 200 projected this year), leaving the destination club in a rough spot. This translates to one thing: Raising the rates.

Exclusive Resorts shareholders invested over $90 million in the company without taking any out in dividends or distributions since the club’s inception in 2003. As a result, membership is becoming more than just a privilege, but also a safety net. Without an aggressive hike, the club will not be able to sustain itself or cover annual costs.

Lowering the overhead is a preferred means of securing the bottom line. Exclusive Resorts cut costs this year by $30 million, though where and on what has not been disclosed. In spite of these efforts, the cost structure has been reduced by 25% but is still threatening to overwhelm the club. That’s where the membership payment increase comes into play. Exclusive Resorts members pay variegated amounts of dues annually on a per-day basis, depending on when they joined. It’s a little like being locked into the same tuition for the duration of a student’s college career depending on the year he or she is accepted. The raised dues will put all members — regardless of when they joined — on the same fee schedule.

Starting in 2011, the annual dues for all Club members will be $995 per plan day. Exclusive Resorts anticipates the club will break even financially later that same year. This new schedule is being phased over a two-year period.

Then comes some good news.

Commencing with the raised fees, every member will be enabled to send extended family to destinations without the members having to be there as well. In addition, members will gain the right to use two residences at the same time.

Exclusive Resorts is forecasting operating revenue and operating expenses of around $110 million each. The raised fees are serving as a means of sustainability, whether or not new members join in the coming years.

Yellowstone Club Sells for $115 Million — Is It Downhill Skiing From Now On?

2009-08-17T18:19:43-07:00

It’s not necessarily news to report that residential and commercial real estate is being traded at bargain-basement prices. This has affected the luxury end, including destination clubs, as well. One of the latest examples of how much the once high-flying luxury real estate market continues to be brought back down to earth is the recent collapse of the Yellowstone Club. After months of being on the market, it was finally sold last week. The value as of a year ago: $400 million. The selling price: $115 million.

The bankrupt private club, which featured high-profile members such as Bill Gates, former vice president Dan Quayle, cycling star Greg Lemond and the late Sen. Jack Kemp, was officially sold July 17 at an auction directed by the U.S. Bankruptcy Court. It’s a swank community, to be sure, which extends across 13,400 acres in Big Sky country. It’s also recognized as the only gated, private ski and golf community in the world.

The purchase comes with a significant amount of land for future development, including 37 subdivided and improved lots of varying sizes, plus an additional 388 “dwelling unit” rights for residential lots or condominium pads, which includes 80 partially developed lots.

The club’s current plan approval allows for a total of 864 residential units with 439 lots and residences already sold. Values of existing homes range from approximately $4 million to $16 million. Most homes have ski-in/ski-out access and are strategically positioned throughout the property, including on-mountain chalets, private ranches, custom homes and condominiums. It was forced into bankruptcy protection last November in the aftermath of the real estate market collapse of the real estate market and years of alleged reckless spending.

One important element to the club is it will continue to be managed by Discovery Land Company, the country’s leading developer and owner of high-profile private golf and resort-style developments. Among Discovery Land’s noted properties are Kukio on the Big Island of Hawaii, Estancia Golf Club in Scottsdale, Ariz., the Madison Club in Palm Springs, Calif., and Baker’s Bay in the Bahama.

Will it be powder to ski across from here on out for the Yellowstone Club? Only time will tell.

Boston Celtics Coach Doc Rivers Partners With Ultimate Escapes

2009-07-02T16:26:18-07:00

NBA coach Doc Rivers is partnering with destination club Ultimate Escapes to raise money for Shepherd’s Hope, a non-profit organization of volunteers that provides access to health care for the uninsured. Through Ultimate Escapes signature Ultimate Giving SM program, individuals will have the chance to bid, via a series of eBay auctions, on six extraordinary packages including a VIP Golf Experience with the world champion coach in Orlando and a VIP Celtics package during the 09/10 season.

The first auction closes July 4, and includes three offerings that will grant winners access to a collection of luxury homes usually reserved for members of the club: a VIP Golf Experience with Doc Rivers in Orlando, a five-night stay in a London home and a five-night stay in a private residence in Turks & Caicos. As part of the Ultimate Giving. initiative, all proceeds from the auction will be donated to the charity of Doc Rivers’ choice, Shepherd’s Hope.

Abercrombie & Kent Offer New Trial Membership Vacations

2009-06-17T09:56:48-07:00

The luxury residences of the Abercrombie & Kent Residence Club are offering a new family deal for a trial run. This trial membership will enable potential members to choose from the club’s portfolio of multi-million-dollar residences in their beach, mountain and golf destinations.

Residences are around 4,000 square-feet, with four bedrooms and four bathrooms. Among the advertised destinations are Turks & Caicos, Deer Valley and Kiawah Island.

The trial membership includes the full range of Abercrombie & Kent Residence Club services, including a global experience manager to orchestrate and manage your stay and provide expert travel recommendations, private transportation to each residence, pre-arrival grocery shopping and a destination host who will help trial members plan excursions and activities.

Additional amenities include behind-the-scenes private tours of the Turtle Hospital at the South Carolina Aquarium, the opportunity to ski with an Olympian in Sun Valley or the chance to meet an artist at the Jackson Hole Center for the Arts.

For a limited time, Trial Membership in the Abercrombie & Kent Residence Club is available for $1,400 per night. [[Abercrombie & Kent]]

Nuggets Coach George Karl on Ultimate Escapes

2009-05-29T13:45:51-07:00

As the playoffs wend their way to what we at HalogenLife hope will be a worthwhile finish (we still can’t get over how thrilling those Celtics-Bulls games turned out to be), we’re reminded of Nuggets coach George Karl’s affinity for Ultimate Escapes destination club.

He happens to globetrot by way of the club each summer. (It’s convenient for him, as it’s a Colorodo-based travel group.) An avid golfer, Coach Karl hits the links at one of the 50 UE locales worldwide&mash;conveniently, they offer free memberships to some of the top golf courses in the country.

“Ultimate Escapes is the perfect travel option for my lifestyle; the homes’ size and decor is beyond impressive and the Escape Planners make each trip flawlessly ideal,” he says. “I look forward to working with the Escape Planners and the entire team to continue their remarkable levels of success.”

Karl is but just a few of the sports figures that are members of Ultimate Escapes, others include Hall of Fame Quarterback Steve Young, Team USA Manager Davey Johnson, University of Illinois head basketball coach Bruce Weber, golf broadcaster David Feherty, and Chicago Bears Offensive Coordinator Ron Turner.

“Go big or go home” is something of a mantra for George Karl. His vacation provider offers a slightly different sentiment: Go big, then go home.

Distinctive Holiday Homes Offers New Membership Promo

2009-05-11T12:23:05-07:00

For the next 60 weeks, Distinctive Holiday Homes (DHH) is offering a limited-time-only promotion for new members amounting to $40,000 per membership week, in addition to annual fees on any current personal plan.

Over the next 60 weeks, of this limited offering is available to current members to upgrade, former members of failed destination clubs and the general public. After that time, DHH will accept referrals from the then-current members for new memberships.

An example of the promo: A custom four bedroom Lake Tahoe property is now five membership days for one week stay; this was previously seven membership days for one.

Additional DHH international destination properties are located in Auckland and Queenstown, New Zealand; Noosa, Australia; Kailua, Hawaii; Lake Tahoe, California; Beaver Creek, Colorado; Megève, France; and Tuscany, Italy.

For more information, visit DHH online.

Survey Says: Market Bleak for Private Residence and Destination Club Owners

2009-05-07T17:23:52-07:00

The potential market for vacation homes, including full ownership and private residence and destination clubs, has declined substantially since 2007. Contributing factors include losses in net worth and a negative 12-month outlook for the economy and personal income among the wealthiest 10 percent of US households surveyed in March 2009.

The American Affluence Research Center (AARC) has been studying this market and publishing findings every two years since 2005. The Spring 2009 survey report includes relevant comparisons to the 2007 survey results. About 60 percent of the affluent target market indicates no familiarity with either the private residence or destination club concepts, which represents little or no change from the 2007 survey. Familiarity with the concepts does vary by demographic segment of the affluent. The latest report is based on the responses of 640 men and women from households with an average income of $290,000, an average net worth of $3.1 million, and average investable assets of $1.4 million. The average age is 56 and 58% are males.

Among those familiar with the concept, 72 percent did not name a brand of private residence club with which they are familiar and 82 percent did not name a brand of destination club with which they are familiar. The majority did indicate recognition of one or more of the nine brands listed for each concept.

The incidence of access to wholly-owned vacation homes and time share, private residence club, and destination club units was essentially the same as in 2007. Reported plans to seriously consider purchase of one of these options during the next 12 months are about half what they were in 2007, with further declines projected over the next 24 month period.

Abercrombie & Kent Residence Club Hosts First Annual Meeting

2009-05-07T15:37:57-07:00

The Abercrombie & Kent Residence Club, an equity destination club that still has a fresh-paint scent (it launched in September 2008) held its first annual meeting in Chicago on April 28. Two members were elected to the board of directors.

“Our company works on behalf of the members, who own the club under our equity model,” said Geoffrey Kent, founder, chairman and chief executive officer of the Abercrombie & Kent Group. “From the beginning, we made a commitment to provide members with financial transparency, regular reporting, and inclusive governance. The annual meeting exemplified the dedication we have to openly communicating timely information to members, including current audited financial figures and our plans for growth.”

The meeting provided n opportunity for members who had only communicated online to meet in person and share their experiences. “From my perspective, the most valuable thing about the annual meeting was the opportunity to meet and socialize with other Club members and hear about their experiences.”

The Abercrombie & Kent Residence Club is the largest equity-based club in the destination club industry. Members own the club and have direct input into how club resources are used. All the residences are owned debt-free and A&K manages the club on the members’ behalf.

Membership includes a broad range of vacation travel options around the globe, from African safaris, to cruises on the Nile, to adventures in the Galapagos. Memberships are currently available. For more information, visit www.akresidenceclub.com .

Ritz Carlton Launches Destination Club

2009-04-30T18:09:08-07:00

The Ritz Carlton has a history steeped in luxury as we all know. When the celebrated hotelier Cesar Ritz redefined the hotel experience in Europe through his management of The Ritz Paris and The Carlton in London, his influence took with Americans in search of a vacation stay on a higher plateau. For more than 80 years his legacy has served as both Ritz Carlton and Marriott hotels’ guiding light.

Twenty five years after setting a new timeshare standard by becoming the first branded hospitality company to enter the vacation ownership market, Marriott International Inc., is now entering the destination club industry.

This week the hotelier unveiled a new Ritz-Carlton Destination Club, which makes Marriott the first branded hospitality company to enter the milieu of vacation ownership opportunities.

The newly launched Ritz-Carlton Destination Club represents an extension of the Ritz-Carlton Club name and reputation. The project aims to continue the hotel chain’s presence in the vacation market and merge it with the high-end fractional ownership industry.

The new equity-based private membership program now offers two choices: Home Club Membership, which is identical to the former Ritz-Carlton Club fractional ownership program that provided titled ownership to a property members can use throughout the year, or a new deeded Portfolio Membership, which affords members the opportunity to experience a variety of premier destinations and accommodations.

“The Ritz-Carlton Destination Club provides the discerning few with a new level of privilege and freedom when they travel,” said Peter J. Watzka, executive vice president and chief operating officer for The Ritz-Carlton Development Company, Inc. “Over the last decade of establishing a second-home alternative for our current Ritz-Carlton Club members, we developed intimate and rewarding, one-to-one relationships. With this commitment to deliver luxury vacation experiences, we evolved the brand to the new Ritz-Carlton Destination Club by blending the attributes of luxurious vacation homes with a heightened, flexibility while also maintaining the exclusivity our members have come to expect.”

Members with a Home Club preference can take advantage of up to 35 days of pre-reserved access at their specific club annually, and can also use a portion of their time at other locations on a reciprocal-use basis in accordance with reservation procedures. Home Club prices range from the low $100,000s to the low $800,000s.

What sets this destination club apart from its peers at this point is projected convenience. This annual allotment of currency is used to reserve accommodations based on travel dates and size of residence, which would allow more flexibility for a member who prefers a different experience each time they travel. When choosing from the collection of residences, each is assigned a varying nightly point value.

An initial Portfolio Membership, which is priced from $120,000, comes with 5,000 club points, but additional interests can be purchased in 2,500 club point increments. The new Hotel Exchange Program also enables members who purchase a Portfolio Membership to utilize a portion of their club points at participating Ritz-Carlton hotels and resorts worldwide.

The Ritz-Carlton Destination Club is an equity-based luxury travel program where Members select either a Home Club Membership which provides a titled residence and usage at a property they can return to every year, or a deeded Portfolio Membership which affords the opportunity to discover a wide variety of locations and experiences. It’s a tough economy, and destination clubs are all taking a hit. Ritz Carlton’s gambling on their reputation as well as on audacity: if this works, a new player, with a new concept, enters the market.

Destination Clubs Take a Different Approach

2009-04-15T09:07:08-07:00

Destination clubs are feeling the economic pinch just like the rest of us. With a backlog of members looking to terminate their contracts, clubs have gotten creative about addressing the issue. Here’s a quick rundown.

Clubs may elect to allow current members the ability to resell their membership on the open market. Quintess Luxury Vacation Club has taken a different approach. The destination club launched a new program for prospective members to take the club on a virtual “test drive.” The new program enables prospective members to get the full experience without putting a hefty sum. It’s less of a commitment that way, according to Quintess. At the end of the trial year, if the prospective member decides to take the plunge, the usual membership deposit is paid over a period of three to six years.

Another approach destination clubs are taking is from a world viewpoint: With wealth comes great responsibility; philanthropy is the new green.

According to Giving USA: The Annual Report on Philanthropy, in 2007 people gave approximately $300B to charity, with the average change rate during a recession has been a drop of only 1%. Adam Capes, CEO of Equity Escapes, announced, “Over the past 2-1/2 years, since our inception, we’ve donated nights held by our management company to numerous charities and non-profits to help them raise money. And our trips have raised around $100,000 per year for different causes in 2007 and 2008. 

The Society For Leisure Enthusiasts, called The Society, is an international portfolio of more than 5,000 luxury vacation rentals for travelers who wish to experience the benefits of a destination club (concierges, private chefs, airport transfers, etc.) without the membership fees. Founded in 2008 by two Oxford University graduates, the Society is becoming known as much for their charitable successes as it is for the high-end vacation home and villa rental program. The Society’s philanthropic arm is called Vacation Homes for Charity.

Abercrombie & Kent Residence Club, an equity-based destination club, is famous for encouraging experiential travel focused on preserving the natural and cultural heritages of communities around the world. As a result the club has supported global causes focused on education, conservation and health.

Entering Las Vegas: A Gamble That Can Pay Off

2009-04-06T11:25:34-07:00

Las Vegas, Nevada is certainly a place where one can lose his shirt. But in the current economic climate, it’s also becoming a more desirable place for one to hang his hat. After the housing bubble started to leak, previously prohibitively priced homes have dropped in value. Sin City, it would seem, can also be nicknamed Bargain City. How big a bargain?

The National Association of Realtors says the median Las Vegas home price declined from $317,400 in 2006 to $181,700 as of last December. That’s a decline of 44 percent. In addition, many of the houses and condos once owned by high rollers have been sold off or seized by lenders. Real estate value for some properties has been reduced by 80 percent.

This is hardly irregular for the city, which has consistently had one of the highest foreclosure rates in the country. And in light of an anemic U.S. job market, there’s little change in sight. Nevada’s unemployment rate has reached double-digits. In a recent Labor Department report, the number of laid-off workers collecting state unemployment benefits jumped to 669,000 in the week ending March 28, the highest since Oct. 2, 1982.

Prospective buyers are flocking to Las Vegas to poach the abandoned properties. Second-home buyers and investors are considering real estate purchases to either rent or flip for future buyers when the economy improves. Several potential investors are from Singapore, Italy, Ireland, Mexico, England, Canada and Australia.

Condos that at one time cost $250,000 in prime locations are now listed at $54,000 to $74,000. According to the Standard & Poor’s Case-Schiller home index, Nevada’s real estate has dropped by more than 32 percent. For perspective, Tampa prices are down 23.3 percent and Boston and Cleveland have shown a less dramatic downturn: They’ve fallen 7.3 and 5.2 percent, respectively.

The lowest month for new-home closings was January 2009, when 249 properties sold. One in 60 homes is in some stage of default, which is the nation’s highest foreclosure rate. Vegas is offering more than just ownership opportunities; hotel prices are at bargain basement prices as well (rooms at the Trump are going for $79 on a weekend night). Flights are cheaper than they have been in years and even casino food is being discounted.

This puts a new spin on the old saw, “The house always wins.”

Equity Estates Boasts Growth Despite Economy

2009-02-20T08:37:38-08:00

As destination clubs scramble for new members and grapple with depreciating home values, the boutique Equity Estates club announced significant growth in the last quarter of 2008. Membership interests in the club—which are available only to accredited investors (read: $1 million in assets or $200,000 in yearly income)—grew by $2.5 million in December, according to a press release yesterday.

Equity Estates is a true equity-based destination club, in which members buy shares of a real estate mutual fund, with the hope of property appreciation. While non-equity based clubs have seen a recent upheaval and rash of bankruptcies, the more conservative debt-free clubs like Equity Estates and Abercrombie & Kent Residence Club appear well-positioned to ride out a recession.

Equity Estates has an estimated 60 members that own a stake in eight properties, worth $1 million to $6 million. The most recent club acquisition, confirmed this month, is a 5-bedroom oceanfront residence in Hilton Head, S.C. Full shares in the club cost $325,000 [update: $350,000], which gets members 30 nights of use each year at the club’s homes.

What's Up with Destination Clubs: Part 3 of 3

2009-02-17T17:19:03-08:00

The recent implosion of some destination clubs and the budget shortfall of Ultimate Escapes has club members on edge. Reporters are intrigued (see the New York Times and Wall Street Journal coverage) and observers seem generally skeptical. All for good reason.

For the past three years, we have covered the industry and informed consumers on how to evaluate a destination club and all the potential high-end vacation home alternatives. It has not always been easy as these are private clubs, and full financial disclosure in particular has been elusive. That’s partly why we have never outright endorsed clubs, handed out awards, or sold club memberships. We do, however, accept advertising from destination clubs, fractional residence developers and luxury hotels.

As a member of Exclusive Resorts for over four years and recently facing renewal of our annual contract, I did what any other member or prospect of a club should do:

Evaluated our club usage over the past 12 months and calculated our real cost-per-night, and general satisfaction with our experiences.

Spoke with other members that I knew to get their impressions. Most were optimistic, but not all of them.

Studied recent club communications – in the case of Exclusive Resorts, it was a comprehensive annual report.

Talked to executives at the club in person, with particular attention to the methodology, timing and results of their recent net asset test.

Like any due diligence, it’s a combination of art and science. I’ve decided to renew our membership and hope for more great vacations in doing so, knowing that there are risks, especially in this worsening economic environment. All destination clubs need access to capital to get to a profitable point; just as developers need access to debt to build properties before they are all sold.

While you won’t see us publish awards or hand out star ratings, we hope to instead arm you with the right questions to ask when looking at the alternatives, from the debt-free model of Abercrombie & Kent Residence Club to the boutique model of Quintess, to the fractional model of The Ritz-Carlton Club.

Ultimate Escapes Pulling Through

2009-02-11T18:16:01-08:00

As destination clubs across the board are fighting to stay above water, Ultimate Escapes looks like it just might keep its strong position in the niche industry. The club recently asked its members to pony up about $22 million to cover some operational budget shortfalls for the coming year. CEO Jim Tousignant told us that $16 million to date have been committed by about 900 members. “We feel very satisfied with the results,” said Tousignant.

What becomes of members who haven’t paid?

The total assessment charge breaks down to about $18,000 per member, which doesn’t necessarily come easily in the current economic environment.

“A small number of members are under severe economic challenges,” said Tousignant. “A lot of members clearly want to stay involved but need to wait.”

Ultimate Escapes set their fee deadline to Feb. 5, after which any member who didn’t begin payment would have their reservations wiped, and their membership deemed inactive. Tousignant expects that many inactive members will revive their membership in the upcoming weeks. Roughly 20% of last year’s membership base is currently not active.

What’s Up with Destination Clubs: Part 2 of 3

2009-02-10T16:02:19-08:00

Most members of destination clubs or buyers of fractional real estate tend to have very positive feedback about their experiences. We think that this trend will accelerate as the economics of second home whole ownership comes under increasing scrutiny by the prospective owner. But surveying a member of a recently-failed destination club, or a buyer in an incomplete fractional development will yield different results.

If the demand for shared-cost vacation homes continues to accelerate, however, we will see several models develop to meet that demand, as entrepreneurs respond to the perceived opportunity:

Destination clubs remain viable, but the current shakeout highlights the need for more transparency and disclosure, as well as an operational model that approaches break-even at a realistic membership sales level.

The debt-free model has reemerged with the launch of Abercrombie & Kent Residence Club. A debt-free model deserves consideration, as the real estate assets are owned outright by the members. This model, often referred to as an equity club, should gain traction now that a major luxury travel brand is putting its muscle behind it.

Fractional real estate developments work for consumers that want to stay in one primary location. We think this solution will see renewed growth based on an ability for owners to get access to different locations via a network. Leading luxury brands like Ritz-Carlton Residences are well positioned to offer this.

New twists on the luxury home rental solution are coming to market—and we expect more—as owners of five-star properties in prime locations decide to offer their homes for rent or lease. Entrepreneurs realize that there is a demand for more luxury and consistency than most rental options currently offer. Villazzo is one such option, and we hope to see more.

For some families, it might be a blend of the above options. In the cases of destination clubs and fractional real estate, we have always believed that the consumer needs to treat the buy-in not as a financial investment, but a lifestyle one with real risk. Not all destination clubs have survived, and likewise not all real estate appreciates in value.

Abercrombie & Kent Residence Club Has Lusso Offer on the Table

2009-02-05T12:52:10-08:00

As destination club the Lusso Collection awaits a Feb. 11th court date on bankruptcy proceedings, several competing clubs have made transition offers to Lusso’s management. But according to Abercrombie & Kent Residence Club president Jarvis Slade, his club’s proposal did not make it to Lusso’s members.

Some Lusso members allegedly discovered the offer through the Chapter 11 case’s Unsecured Creditors’ Committee, and contacted Slade, saying that the Abercrombie & Kent proposal was not shared.

“We along with several other clubs made proposals over the last 30 days,” said Slade. “But from our understanding, the Abercrombie & Kent proposal was not shared with the Lusso membership base.”

Slade seemed confident in his club’s offer, which he plans to communicate directly in a conference call with Lusso members tonight at 7:00 PM CDT. “We have the availability for the members,” said Slade. “The equity model is the one true sustainable destination club model moving forward.”

Lusso members interested in the conference call with Abercrombie & Kent may contact Christian Banovich at 630.725.3400 ext. 284 to obtain the call-in number and password.

Questions Loom Around Lusso Bankruptcy

2009-02-04T14:37:57-08:00

Some questions are doomed to be left unanswered amid the muck of recent bankruptcies in the destination club industry. In December of last year, destination club the Lusso Collection filed for Chapter 11 bankruptcy, issued a brief statement to its members, and has since remained publicly silent. Our emails to the club’s management have gone unanswered, but a few updates have circulated through the courts nonetheless.

Number of leased homes higher than expected

After the bankruptcy filing, a court document surfaced from members looking to get audited financials from the Lusso Collection management before handing over their next round of dues. The document, filed in the United States Bankruptcy Court for the District of Minnesota, claims that of the 26 Lusso property interests, only 5 were owned outright. The remaining properties consisted of 7 operating leases (short-term, not to finance), 11 capital leases (ownership of the asset is transferred to the lessee at the end of the lease term), and 3 non-subsidiary LLCs that control properties (who knows; financing members?).

Financing members allegedly did not pay initial deposits or yearly dues

The court document filed by the ad hoc committee of members also stated that certain financing members of the club (members who acquired or maintained properties) were perhaps not subject to any deposit or yearly dues agreements. The club had an estimated 150 members in total who paid refundable deposits of $425,000, and annual dues of $28,000. It is still unclear what has become of the member deposits.

What’s Up with Destination Clubs: Part 1 of 3

2009-02-03T09:41:49-08:00

Almost three years ago, we wrote:

The question for all destination clubs is, “what would happen in a tougher economic environment, or worse yet, an economic meltdown?” Of course that is harder to predict, but you can get an impression now of how a club is managed financially. Ask to see audited financial statements that show the value of the real estate portfolio (minus debt) when compared to membership refund obligations. Ask about operating deficits and their access to capital to fund that. Ask for a list of members, from which you will call three or four to discuss their club experiences.

Sadly, the meltdown for many industries has come within the last six months (equity and debt markets frozen, consumer spending pulled back), so the destination club shakeout is brutal—and accelerating.

The big questions for destination clubs

Does the consumer still value and appreciate the experience?

It seems like the answer is generally yes, but the destination club model is not for everyone due to price, availability, and other factors. But satisfaction in these clubs tends to be high according to the clubs (as you would expect) and according to members that we have talked to over the years.

Is the business model proven?

Not yet. We don’t know of any club that has announced profitable operations, so they will continue to require access to capital to fund growth. Any current member or prospect needs to ask some obvious questions, including:

Is the club experience right for me, and does the expected cost-per-night fit my budget?

An expected cost-per-night should be calculated based on expected usage, cost of capital, and other factors. Use our online calculator as a starting point.

Is the club providing enough information for me to assess if it can repay its member refund and debt obligations?

I have asked these questions myself over the last six months, as we have been members of Exclusive Resorts for over four years now, and our annual membership is coming up again for renewal. More to follow.

Abercrombie & Kent Residence Club Looks Ahead

2009-02-05T11:29:14-08:00

The story of Abercrombie & Kent Residence Club has thus far been short but action-packed. Since its inception in September, the equity-based destination club has absorbed members from two former destination clubs, and has appeared to weather the slouching economy surprisingly well.

Remaining calm

“There is no debt on the club’s homes,” said
Abercrombie & Kent Residence Club president Jarvis Slade in a recent interview. Built on the principle of real estate equity, Abercrombie & Kent Residence Club rolled-in previous equity-based clubs Crescendo and BelleHavens. Club member deposits go towards purchasing homes without mortgage debt, a conservative approach and a departure from the typical destination club model. The Abercrombie & Kent Residence Club currently owns 17 homes plus a number of leased villas and trade agreements with Stein Hotels for member use.

What does the club expect in 2009?

The club currently has an estimated 150 members, most of which were absorbed with the Crescendo and BelleHavens acquisition. However new membership sales have dropped considerably across all clubs since September. “Fifty to 100 new members in 2009 would be outstanding, based on what’s going on in the current economic conditions,” said Slade.

Slade’s club additionally reaps the corporate support of veteran travel company, Abercrombie & Kent, giving the young destination club a relative safety net. Slow sales and consumer caution in the next year could broadside most destination clubs.

Nonetheless Slade said the club just acquired seven new homes in the last year at locations like Turks and Caicos, Hawaii, and Snowmass. Based on member input, additional development is planned for the Mayan Riviera in Mexico.

Decision Time Draws Near for Ultimate Escapes Members

2009-02-03T11:26:56-08:00

Ultimate Escapes members are on their toes this week, as the destination club expects all 1200+ members to shell-out about $22 million to keep the club in business. If a member doesn’t meet the Friday deadline for payment, their membership will become inactive. To facilitate member concerns, Ultimate Escapes is operating a FAQ section in the members-only part of their website, which attempts to address member concerns.

Ultimate Escapes members: Ask questions

It’s good advice for any club member and we’ve recommended it from day one; grill your club on the specifics of their financial situation and their plan moving forward. If you’re an Ultimate Escapes member and missed the management conference call, here’s what you should be asking before Friday:

What options did you look at to cover budget shortfalls and why did you choose the assessment charge approach?

Is the assessment financing enough or is more capital needed, and if so, when?

What do members get in return for the assessment?

Have you done everything possible to reduce operating costs?

You bought Tanner & Haley from bankruptcy, so you know the mistakes not to make. What happened at Ultimate Escapes in the past year to lead to this tight financial situation?

What percentage of members need to vote “yes” on the assessment for the club to continue operations?

Do you think the current club model is viable?

Rash of Bankruptcies Turns Heads

2009-01-28T09:37:33-08:00

Fractional Residence Spotlight: Sandcastles

2009-01-27T13:15:12-08:00

Michelle Higgins of the New York Times put it best: “The Caribbean is on sale.” Struggling real estate markets and consumer caution are hitting the luxury travel sector hard, even in the peak travel season of late winter. But wary consumers are exactly the crowd that Bobby Gibson’s company Sandcastles is looking to attract.

An off-shoot of the 20 year-old Villas Caribe upscale villa rental network, Sandcastles appeals to would-be owners looking for an equity interest in a luxury villa. A considerable amount of time goes unoccupied in Villas Caribe’s 3000-home network throughout the Caribbean and Mexico. Gibson rhetorically asked us, “how can we address an ownership option for the empty periods in some of these homes? Fractional ownership really stuck out based on the usage patterns of a lot of our clients.”

What’s for Sale

Three residences with 1/10th (or about 5 weeks) fractional ownership interests are available through Sandcastles. The clear deal of the three, called Villa Paradise, costs $298,000 for 6-bedrooms, 4000 sq. ft., four patios (including one on the rooftop), a private pool, and lots more. It’s beachside in Playa Paraiso, Riviera Maya, and includes a jet ski.

The Las Pergolas home is the next most-economical at $430,000, but consider what you get: 5 bedrooms, 6 bathrooms, and 11,993 sq. ft. overlooking the Bay of Banderas in Puerto Vallarta. Las Pergolas is also appointed with an SUV and an infinity pool.

Sandcastles’ premium offering is the Dulce Suenos home, with a 1/10th ownership priced at $599,000. The 4-bedroom, 4.5-bathroom home sits on 100’ of oceanfront property in Isla Navidad, Costa Alegre. Some generous amenities for this specific home include a full staff, a Grady White Marlin 30’ yacht, a Land Rover LSE, infinity pool, and list really goes on.

What You Get

All of Sandcastles’ homes include full concierge and private chef services in addition to the residence-specific amenities. Ownership also gets you discounted rates at about 80 homes within the Villas Caribe network. Trades are not available, per-se, however Gibson told us that Sandcastles can facilitate trades if there is a mutual interest.

The Halogen Guides Take

Sandcastles has an additional appeal for current owners stuck with a multi-million dollar villa; they can fractionalize unused time at the home. This means they can build a new ownership structure that lets you keep your ideal usage period and not have to pay for the rest of the time that the home sits unused.

The discounted rates from Villas Caribe is a nice touch, too. While there are only 80 homes for fractional owners to choose from, it’s a worthwhile competitive edge. Competing destination clubs have extensive locations within the Caribbean as well, so be sure to compare your options.

Ultimate Escapes and the $22 Million Dollar Question

2009-01-24T10:37:33-08:00

Ultimate Escapes’ management held an interactive conference call Thursday night in which about 800 members heard-out the destination club’s decision to charge a one-time $22 million fee spread across all current members. The call closed with a member Q&A session. The fee is designed to cover heavy losses in real estate value and a sharp decline in new membership sales.

“One hundred percent of this [assessment] charge is slated to pay for the operational costs of the club,” said CEO Jim Tousignant. “We think it’s a one-time measure to deal with an absurd market measure.”

What options did Ultimate Escapes look at?

The alternative to a one-time assessment fee would be a permanent increase in annual dues; a move that members of Quintess recently agreed to. Tousignant said that a permanent increase in dues is not necessary for Ultimate Escapes members, nor in the best interest of the club over the long term. However, dues increases are integral to the destination club business model, and as the club matures (a topic we’ve covered in-depth in our decision guide to destination clubs), it’s unlikely that Ultimate Escapes wouldn’t follow suit. Annual dues are not technically the crux of a destination club’s success though.

“There is a false understanding in the industry of operating solely on annual dues; sales are necessary in even the best of times,” Tousignant said. He also mentioned that the $22 million one-time charge takes into account a projected drop in sales over the next year, and would cover those sales losses if they arise.

Reductions in operating expenses

Ultimate Escapes undertook staff layoffs and cut salaries in the last two months, and according to Tousignant, the senior management bore the highest pay cuts. In November, competing destination club and industry leader Exclusive Resorts announced a 10% reduction in its workforce to reign-in operational costs. Tousignant said Ultimate Escapes’ recent staff reduction was slightly higher. In addition to staff reductions, the club also reduced its mortage interest on some properties, and significant cuts have been made in marketing and headquarters costs.

Pending merger still lingers

Ultimate Escapes spawned from the $200 million merger of previously-competing destination clubs Ultimate Resort and Private Escapes. While the merger’s completion was officially announced last summer, additional delays put off the final close on the deal. “The market crash created issues with the lender and caused a delay,” said Tousignant. In a worst-case scenario, Private Escapes and Ultimate Resort would likely go back to operating under their respective previous names. Pending merger paperwork has not affected the combined club’s home reservation schedule, or the 1,200 members’ access to those homes. The merger is expected to close in mid-2009.

What’s next?

If a significant percentage of members pay the assessment fee (which Tousignant seemed confident in), Ultimate Escapes plans to expand their reciprocity program, which was mentioned to us in November. Tousignant said, “it gives affluent consumers who are buying whole ownership resort residences or fractional homes a chance to experience our club through an exchange program. Our hope is that many of them will become buyers of club memberships. Our members can stay at [their] homes, and developers pay us substantial fees.” The club already has an agreement in place with resort developer Cappella.

We encourage our readers and Ultimate Escapes members to share their thoughts, so feel free to weigh-in below.

Ultimate Escapes Asks Members to Pony Up $20 Million

2009-01-21T06:36:24-08:00

It’s high-time for annual financial assessments among destination clubs, and the 2009 outlook for Ultimate Escapes seems to be leaving more questions than answers. The club is seeking about $20 million from its members to cover an operating budget shortfall; a move that has understandably generated a considerable amount of buzz on the destination club forums. Many of the details have unfortunately been kept under wraps, but there’s no shortage of speculation on the forums.

Ultimate Escapes is currently the second-largest destination club, with about 1,300 members. The third-largest destination club, Quintess, made a similar move in mid-December, asking its members (including the ones on their resignation list) to pay higher annual dues to ensure the club’s health moving forward. The members approved the decision in mid-December.

When we spoke with Ultimate Escapes’ management in November of last year, all indicators pointed to good financial health in the club. We are currently reaching out to the club’s management to discuss the contrasting details of the 2009 assessment.

One Key Looks Locked Down

2009-03-31T16:13:02-07:00

Financial woes seem to have locked down travel club One Key, as the hybrid villa rental and destination club’s website sits in ominous limbo.

One Key offered a travel card program for pre-paid stays in one of about 250 homes. While One Key positioned itself as a destination club, the company did not own any real estate, but rather tapped into an extensive network of luxury villas that aren’t typically available on the rental market. Typical destination clubs, however, own a sizable portion of the real estate used by their members, and lease the rest.

One Key did not charge a refundable membership deposit like most destination clubs either, and instead relied on travel card sales ranging from $34,900 to $84,900. Membership deposits are part of the backing force for a club’s financial security, but a recent rash of club woes have shown that membership deposits are not a ticket to a club’s solvency.

Our call to One Key went unanswered at press time, so it is unclear what specifically forced the company to cease operations. It is also unclear whether or not current members will get to used their remaining prepaid nights, which were marketed with no expiration date.