The concept of a destination club was introduced in 1998, when Rob McGrath, a veteran of the luxury
timeshare
A timeshare (sometimes called vacation ownership) is a property with a divided form of ownership or use rights. These properties are typically resort condominium units, in which multiple parties hold rights to use the property, and each owner ...
development business, launched Private Retreats. Since then, more than 30 companies have launched clubs targeting affluent families that want the benefits of second home ownership, but with more flexibility and choice in where they vacation each year. Inspirato with American Express is the world's largest destination club.
By joining a destination club, a member gains access to a collection of vacation homes in various locations around the world in exchange for a one-time membership fee and annual membership dues. Consistent with other vacation options, inventory can be booked based on availability. Some clubs allow members to purchase different membership-types which offer different levels of reservation priority, personalized services and resort amenities such as beach clubs, luxury spas and private chefs.
What is included
Benefits and access privileges vary by club. Here is a list of those offered by most clubs:
* Access to private homes, town homes, condominiums or hotel units, typically on resort properties or near iconic resort locations.
* Usage rules vary between restricted travel (10–60 days) of home usage to unrestricted travel by club members.
* The ability to book homes in advance and on a “space available” basis, as well as a system to handle the demand for holiday or peak periods.
* High service levels including: pre-trip planning, on-location concierge services, and daily housekeeping service.
* Luxury furnishings and audio-visual equipment
* Additional membership privileges and benefits, including special club events, and access to resort amenities, spas and fitness centers.
Membership model
While there are several variations, the basic choices are between equity, non-equity and next-generation clubs that defy the standard models. This is similar to the membership model choices at country clubs. In all models, club members provide an up-front sum and an annual fee though the exact amounts vary significantly by club-type.
Non-Equity Club Model - In non-equity clubs, members enjoy the hospitality benefits of the club, but don’t own an interest in the homes and so are not impacted by the real estate appreciation or losses of the club's residence portfolio. The up-front payment is a deposit, and traditionally when they resign from the club, members receive 75% to 100% of that deposit back. However, in recent years, non-equity clubs have gotten away from refunds.
* ''Exclusive Resorts (launched in 2002)'' is an example of this model. Members pay a joining fee that covers a number of travel nights per year. Exclusive Resorts exclusively owns each home in their portfolio. Each year, members commit to and pay for a certain number of nights at a flat rate. At Exclusive Resorts, members are only subject to refunds at a 3 to 1 basis, meaning a member will only receive a refund if three new members join.
Equity Club Model - With equity clubs, the up-front payment can be considered an investment of sorts (or at least a reduction in the
opportunity cost of making the up-front payment), subject to typical investment risks. When exiting the club, the refund of that fee is adjusted to reflect changes to the value of the home portfolio or in the fee for new members. Various clubs have different ways of providing this benefit. Also, with an equity club, the members own the club's real estate portfolio, which provides additional security of the membership deposits.
* ''The Hideaways Club (launched in 2007)'' is an example of this model. Members purchase a share of the property company that entitles them to nights or points redeemable as weeks throughout the year. The members therefore collectively own the properties through this property company, and the services provided to the members are operated through the operating company. At The Hideaways Club, members are subject to leaving the club on a 2 in 1 out basis, meaning a member can sell their share when another two members join with the same share type.
Managed and Controlled Club Model - During the real estate boom of the 2000s the equity model had appeal because members could benefit from the rapid appreciation of real estate assets.
[Sharon Vigoros]
Revised Destination Club Guide
SherpaReport, March 13, 2009. The economic changes between 2008-2011 resulted in innovation within the destination club marketplace and has provided more options for luxury travelers.
[Paul Sulliva]
Destination Clubs Introduce Budget Versions
The New York Times, February 17, 2012 The travel product and services available to members through a managed and controlled model are consistent with equity and non-equity clubs, but, because this model hinges on the club long-term leasing the properties in its portfolio as opposed to owning them, the cost of membership is significantly lower. Typically, members pay an up-front membership fee and an annual renewal fee and do not gain equity or appreciation. Members gain access to a portfolio of residences and members are able to book travel by paying below-market, members-only nightly rates as they travel. Unlike traditional equity-based travel clubs, travel clubs of this variety do not require a long-term commitment nor do members have to join a waiting list if they wish to revoke their membership.
* ''Inspirato with American Express (launched in January 2011) ''is currently the only example of this new, managed and controlled club model.
Properties and destinations
Destination clubs manage properties in destinations around the world. Clubs are subject to local rental home laws and ordinances regarding short-term home leases and nightly rentals. Mountain resort communities such as
Vail
Vail is a home rule municipality in Eagle County, Colorado, United States. The population of the town was 4,835 in 2020. Home to Vail Ski Resort, the largest ski mountain in Colorado, the town is known for its hotels, dining, and for the numer ...
,
Aspen
Aspen is a common name for certain tree species; some, but not all, are classified by botanists in the section ''Populus'', of the '' Populus'' genus.
Species
These species are called aspens:
*'' Populus adenopoda'' – Chinese aspen (Chin ...
,
Steamboat
A steamboat is a boat that is marine propulsion, propelled primarily by marine steam engine, steam power, typically driving propellers or Paddle steamer, paddlewheels. Steamboats sometimes use the ship prefix, prefix designation SS, S.S. or S/S ...
,
Telluride and
Sun Valley are hotbeds for club residences. Beach communities and island locations such as
Rosemary Beach
Rosemary Beach is an unincorporated planned community in Walton County, Florida, United States on a beach side road, CR 30A, on the Gulf Coast.
Rosemary Beach is developed on land originally part of the older Inlet Beach neighborhood. The town ...
,
Fort Lauderdale
A fortification is a military construction or building designed for the defense of territories in warfare, and is also used to establish rule in a region during peacetime. The term is derived from Latin ''fortis'' ("strong") and ''facere'' ...
,
Maui,
Los Cabos
LOS, or Los, or LoS may refer to:
Science and technology
* Length of stay, the duration of a single episode of hospitalisation
* Level of service, a measure used by traffic engineers
* Level of significance, a measure of statistical significanc ...
,
St Barts are also very common. As traveler demand has increased clubs have added cultural hubs such as
New York City
New York, often called New York City or NYC, is the List of United States cities by population, most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the L ...
,
Chicago
(''City in a Garden''); I Will
, image_map =
, map_caption = Interactive Map of Chicago
, coordinates =
, coordinates_footnotes =
, subdivision_type = Country
, subdivision_name ...
,
Paris
Paris () is the capital and most populous city of France, with an estimated population of 2,165,423 residents in 2019 in an area of more than 105 km² (41 sq mi), making it the 30th most densely populated city in the world in 2020. S ...
and
London
London is the capital and largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary down to the North Sea, and has been a majo ...
to their portfolios. Additionally, as club members has requested a greater offering of unique lifestyle destinations and experiential travel clubs have added locations such as
Tuscany
Tuscany ( ; it, Toscana ) is a Regions of Italy, region in central Italy with an area of about and a population of about 3.8 million inhabitants. The regional capital is Florence (''Firenze'').
Tuscany is known for its landscapes, history, art ...
,
Bordeaux
Bordeaux ( , ; Gascon oc, Bordèu ; eu, Bordele; it, Bordò; es, Burdeos) is a port city on the river Garonne in the Gironde department, Southwestern France. It is the capital of the Nouvelle-Aquitaine region, as well as the prefectur ...
,
Patagonia
Patagonia () refers to a geographical region that encompasses the southern end of South America, governed by Argentina and Chile. The region comprises the southern section of the Andes Mountains with lakes, fjords, temperate rainforests, and gl ...
, the
Galapagos and
Wine Country
Wine Country is the region of California, in the northern San Francisco Bay Area, known worldwide as a premier wine-growing region. The region is famed for its wineries, its cuisine, Michelin star restaurants, boutique hotels, luxury resort ...
.
History
Private Retreats launched the industry in 1998, with one club, Private Retreats, under the company name ''Preferred Retreats''. The company was later renamed ''Tanner and Haley'', with over 900 members in 2006.
In 2002
Brent Handler and
Brad Handler founded Exclusive Resorts.
[Virginia Law Alumni Q&]
Virginia Law Alumni Q&A
, Virginia Law, Brad Handler '95 on eBay, Founding a Travel Empire and Luck, September 28, 2011 The Handler brothers sold majority ownership of Exclusive Resorts to Steve Case in 2003. Exclusive Resorts will commemorate its 10th Anniversary in 2013. To date, the Club offers more than 350 residences around the globe in addition to providing its 3500 members with access to trips and events across all seven continents.
Steve Case remains Chairman and majority shareholder of Exclusive Resorts. He is the former CEO of
AOL.com.
Following the launch of Exclusive Resorts, from 2003 to 2006 entrepreneurs launched competitive clubs such as The Hideaways Club, Quintess, M Private Residences, Private Escapes, and Ultimate Resort. Specialty clubs joined the mix as well, for instance The Markers Club for golf and Emperum Club for both business and leisure travelers. Emperum Club has since restructured into a boutique travel company specializing in preferential rates on long stays. In 2009, a Fortune 200 company,
Marriott International Inc. entered the market when they launched the Ritz-Carlton Destination Club.
Despite generally strong membership sales across the industry in the summer of 2006, ''Tanner & Haley Resorts'' entered
Chapter 11
Chapter 11 of the United States Bankruptcy Code (Title 11 of the United States Code) permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, wheth ...
bankruptcy proceedings.
[Jane Engl]
Before joining a destination club, ask questions. More travelers are joining such associations. Whether they are a safe investment is up for debate.
Los Angeles Times
The ''Los Angeles Times'' (abbreviated as ''LA Times'') is a daily newspaper that started publishing in Los Angeles in 1881. Based in the LA-adjacent suburb of El Segundo since 2018, it is the sixth-largest newspaper by circulation in the Un ...
July 27, 2008[State of the Destination Club Industry Report](_blank)
Business Wire, December 12, 2006. As a group, members of that club lost more than $200 million in the bankruptcy.
However, the real estate and members of Tanner and Haley were acquired by another destination club, Ultimate Resort. May 2008 Ultimate Resorts and Private Escapes merged to form Ultimate Escape.
Ultimately, this led to the creation of several entities focused on consumer protection. The Destination Club Association was created to help govern the industry by the leading clubs and supported financial transparency by clubs and an increase in truth in advertising. Halogen Guides and SherpaReport serve as media outlets focusing on destination club coverage.
In 2011 Brent and Brad Handler re-entered the destination club marketplace with the launch of Denver-based Inspirato.
[Inspirato: A New Vacation Clu]
Inspirato: A New Luxury Vacation Club Designed By Brent Handler, Co-Founder of Exclusive Resorts
, Luxist, Jan 6th 2011 On May 16, 2012, 16 months after opening, Inspirato announced it had surpassed the 10,000 vacation-night milestone in addition to servicing nearly 2,000 club members, receiving capital investments from
Kleiner Perkins Caufield & Byers
Kleiner Perkins, formerly Kleiner Perkins Caufield & Byers (KPCB), is an American venture capital firm which specializes in investing in incubation, early stage and growth companies. Since its founding in 1972, the firm has backed entrepreneur ...
and
Institutional Venture Partners, raising more than $1 million for charitable causes, and being named one of "America’s Most Promising Companies" by
Forbes
''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also re ...
magazine and "Best of the Best 2012: Vacation Homes" by
Robb Report
The ''Robb Report'' is an American, English-language, luxury-lifestyle magazine featuring products, including automobiles, aviation, boating, real estate and watches. Founded in 1976, it is currently owned by Penske Media Corporation. It also ...
. In 2013, Inspirato announced a partnership with
American Express
American Express Company (Amex) is an American multinational corporation specialized in payment card services headquartered at 200 Vesey Street in the Battery Park City neighborhood of Lower Manhattan in New York City. The company was found ...
. Inspirato, now known as "Inspirato with American Express” is the first luxury destination club to enter into such a partnership with a major company. In April 2013, Inspirato with American Express launched "Inspirato for Business," a corporate offering enabling businesses to access Inspirato’s portfolio of luxury homes for executive vacations, company meetings and retreats, and employee incentives and reward travel. In July 2013 Inspirato welcomed their 4,000th member, making them the largest luxury destination club in the world, by number of members.
In December 2013, Inspirato announced it had combined with Portico Club, a destination club launched by Exclusive Resorts in 2012, joining the two fastest growing clubs in the industry. The newly combined club, which continues to operate under the name “Inspirato with American Express” and under the leadership of Inspirato CEO Brent Handler, will offer members more than 500 vacation choices in more than 100 destinations. As a result of the combination, Exclusive Resorts and its owner
Revolution LLC
Revolution LLC is an American investment firm based in Washington, D.C., founded in 2005 by AOL co-founder Steve Case, after leaving the AOL Time Warner board. The firm seeks to fund entrepreneurs who are transforming legacy industries with inno ...
received a minority stake in Inspirato, reuniting Brent and Brad Handler, the co-founders of Exclusive Resorts, with Exclusive Resorts’ current Chairman,
Steve Case.
Well-managed destination clubs remain an attractive vacation option for affluent families. And companies within the space have continued to adapt and grow.
[Lucy Warwick-Chin]
A Shared Destiny
Financial Times, December 5, 2009. It is also important to consider how the recent recession has affected customer attitudes related to luxury products and vacation experiences.
Deposits and legal action
The traditional Destination Club business model typically includes a refundable portion of the membership fee due to the member when they exit the club. Members who request to exit the club are subject to the terms of their Membership Agreement. The industry standard is 3 in 1 out: 1 member is allowed to exit the club for every 3 new members who join. The 3 in 1 out rule is designed to protect the club if it is deluged with members wanting to exit when there are no new members wanting to join. Since the economic downturn in 2008 the volume of equity club members complaining and requesting to exit destination clubs has increased dramatically prompting legal action in some instances: specific examples of this are a lawsuit against Ultimate Escapes LLC and the Exclusive Resorts Member Lawsuit.
Destination Clubs typically include contractual protections requiring liquidation after a certain period of time if not enough new members have joined to offset those resigning, in which case the liquidation proceeds are distributed to fulfill the refund requirements.
Some traditional destination clubs have attempted to reduce the risk of the 3 in 1 out rule by providing members with ownership and priority over other creditors, making fluctuations in the value of the club's residence portfolio an important consideration. The evolution from the traditional destination club model to next generation club has removed the 3 in 1 out rule entirely by allowing users to renew membership annually, exit the club at any time without penalty, and even offers a money-back guarantee to some new members.
See also
*
Fractional ownership
Fractional ownership is a method in which several unrelated parties can share in, and mitigate the risk of, ownership of a high-value tangible asset, usually a jet, yacht or piece of resort real estate. It can be done for strictly monetary reason ...
References
{{DEFAULTSORT:Destination Club
Timeshare
Destination resorts
Clubs and societies