Homes Away From Home
An alternative to hotels, destination clubs offer travelers a myriad of luxe vacation homes all over the world
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"One reason people buy second homes is the potential for appreciation, but that was missing in these models," says Gilson. "They gave members usage but not equity. From the beginning we were determined to give equity, which is the best asset protection…. We guarantee one debt-free property for every ten members. Now we are seeing more equity-based clubs, but not all equity clubs are created equal. Some say you'll get the current value of your membership, but that's just a proxy. We sell the same kind of equity you have in your house, because our members own the houses."
"BelleHavens provides a very transparent level of financial security," says Shove. "Crescendo, based in the Bay Area, is another twist: it is really a real estate investment company, regulated by the SEC. You invest, they use the funds to buy homes and then make them available to investors. On the back end it works like a destination club, but gives the investor the opportunity to capitalize on any appreciation. In a traditional or non-equity club, you do not capture any appreciation."
"Our membership actually owns the club," says Quintess's Estler, in yet another wrinkle on the model. "Think of it as a golf country club. The membership fee lets you join. But you can also be an owner by investing additional dollars and getting equity, and 65 percent of our members have chosen to buy a piece of the club, and they own the majority of the club. They get totally transparent financial reporting with quarterly Big Four audit reports." Similarly, Ultimate Resort has introduced a lifetime membership model in which it promises to refund 80 percent of the membership deposit at current value, not based on the original price, which has been the norm.
The industry is still evolving. Reservation systems and policies are being refined and international reciprocity agreements, which will extend the range of destinations offered, are widely expected. Clubs will also continue to add value with special events and activities for members, partnerships with private jet companies and other member benefits. But experts agree that the clubs are first and foremost discretionary lifestyle purchases, not investments. "It's silly to look at it as an investment," says Schiciano, the professional investor. "Pay your money, enjoy your vacation. It is what it is."
Larry Olmsted is a Cigar Aficionado contributing editor.
THE HOTTEST CLUBS
There are now about 20 destination clubs, and more launching. Here are some of the most notable:
BelleHavens: An equity-based club with 50 members and 11 homes. Membership from $200,000 with annual dues of $17,500. www.bellehavens.com
Exclusive Resorts: The largest and one of the oldest clubs, with more than 300 homes and 2,400 members. Membership plans from $225,000 and annual dues from $10,500. www.exclusiveresorts.com
The Markers: A destination club specializing in golf with seven homes in locales ranging from Scotland to Oregon to New Zealand. Plans from $285,000 and $16,500 per year. www.themarkersclub.com
Private Escapes Destinations Clubs: With nearly 300 members and 50 residences, the clubs include three distinct membership tiers: Premiere, Platinum and Pinnacle. Plans from $105,000 and $7,700 annually. www.privateescapes.com
Quintess, The Leading Residences of the World: Recently merged with Dreamcatcher and Leading Residences of the World to create a club with more than 280 members and 49 homes at higher price points than most competitors. From $185,000 and $14,000 in annual dues to $750,000 and $52,000. www.quintess.com
Solstice: A small high-end club that recently merged with Parallel. Ten homes valued at an average of $6 million (six new homes will be added). Membership starts at $505,000 with $26,250 to $68,000 in annual dues. www.solsticecollection.com
Ultimate Resort: Recently bought Tanner & Haley's assets (worth $98 million) and, with the merger, upped its membership numbers from about 100 to more than 1,000 and properties from 10 to 100. Five plans from $120,000 with annual dues of $9,500. www.ultimateresort.com
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