High Country Club
Few destination clubs have enjoyed such meteoric rises and such colossal falls as High Country Club.
The self proclaimed "destination club for everyone" launched in September of 2005. Founded by Christian Kirschner, a licensed real estate broker in Colorado, the vision for the club was for people like himself to be able to enjoy the destination club experience.
"When we looked at the types of destination travel clubs around, we realized there was a whole group of people being underserved," said Kirschner. "People just like us who want to visit luxury locations, stay in luxury accommodations and not pay a luxury price for it. We offer virtually the same types of properties, amenities and conveniences that other, more expensive clubs offer but at a significantly lower price."
As implied by Kirschner, the primary competitve advantage were membership deposits and annual dues that were but a fraction of thier competitors. The club's public introductory Affiliate Membership deposit started at $15,000, less than other club's annual dues. The club also offered financing, using the club's Private Membership as an example. "For money that's being spent on just one vacation, you could afford ten or more. In fact, for as little as $90/month, you could be financing your one-time $20,000 Private Membership fee."
Based on the club's exceptionally low cost structure, coupled with an equity membership option that allowed members the opportunity to redeem their membership at the future value of the membership, and the club quickly established themselves as a player in the industry.
Within ten months in July of 2006, High Country Club had already surpassed the 100 member mark, just a month off the pace that Exclusive Resorts had set for their first 100 members years earlier. Six months later, the club had reached the 200 member plateau.
With membership soaring, the fiscal responsibilities required of a club with such thin margins quickly flew out the window. Homes were largeley financed, the club reached at properties outside the model's price range, annual dues never approached the carrying costs for the properties, and executives began to drastically increase their salaries.
Despite the problems with the club model, the club continued to see success until the summer of 2008. As real estate prices and the stock market began to stumble, the flaws in the destination club model that had remained behind the curtain were quickly brought to the forefront.
In a letter to members, Kirschner wrote "The economy has and continues to negatively affect the prospects for High Country Club and the way we are able to operate. Since the beginning of 2008, we have seen our ability to raise capital become increasingly difficult, our investor sources have not come through, the ability to obtain credit is not available and consumer confidence has deteriorated. At the end of 2007, our net asset test showed that the net assets of the business exceeded the amount of our member refundable deposit obligations. During 2008, we have seen significant decreases in our property values versus our 2007 appraisals, which means the equity in our portfolio has greatly diminished over the past 10 month period. Membership sales have declined since the beginning of 2008 because of consumer fears, and with the economic events of the past 60 days, new sales have become next to impossible."
During the course of the economic crisis, High Country Club aggressively pursued a merger/acquistion. "I approached several destination clubs and we made a decision to move forward with one," said Kirschner. Just weeks before Kirschner's letter to members, the deal was terminated due to the strains of the economy.
With a merger out of the picture, High Country Club was forced to drastically reorganize their business and attempted to sell off a substantial portion of their property portfolio, relieved the vast majority of the club's employees, and drastically increased prices. The new membership model never gained the support it needed from members and the club was forced into bankruptcy.
With nearly 400 members left without a club and with little chance of receiving any of their membership deposit back, several high profile clubs including Ultimate Escapes and Distinctive Holiday Homes made strong pushes to bring in the castoff members. Paragon Destinations, created by a former High Country Club member, also emerged looking to fill the gap left by High Country Club at the value level as The Phoenix Club would also be created out of the ashes with their own vision for the remnants of the former High Country Club.
To learn more about High Country Club, please visit the club's quick links found to the right or request a free copy of our Destination Club Guide.
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