Ben Addoms Discusses The Recent Changes at Quintess and An Upcoming LUSSO Offering

By: Destination Club News
Date: January 30, 2009

Earlier this week, The Veras Group spoke with Quintess's Ben Addoms. Like many other destination clubs, Quintess has made changes to the club to combat a chaotic industry that has already forced High Country Club to file for Chapter 7 and One Key World to cease operations. Ben discussed the differences between the operating models at Quintess and other clubs and a potential offering to members of the struggling LUSSO Collection.

The Veras Group: Like other clubs suffering through this economic downturn, you have increased annual dues and reduced operational costs to align your 2009 projections with 2009 costs. With these changes, can Quintess be self sufficient and rely solely on membership dues and nightly fees to cover operating costs?

Addoms: We are at the point where our members' annual dues and fees cover their annual travel expenses.

We have planned to be steady over a 10 year period. We restructured in December where members annual dues and fees cover operational costs and then went back and restructured with our equity partners. We are confident that we can explain inflows and outflows and, with or without new member sales, the company operations will get better and better as the economy turns around.

The Veras Group: 88% of your members voted to increase annual dues and have members on the resignation list continue to pay their annual dues. With everyone else feeling the same pressures the economy is placing on the destination club industry, did you believe you would receive such strong support and what does this say about your membership base?

Addoms: I think there are several things. Members understood that the alternative wasn't their best option. Liquidating the homes in our portfolio would be challenging, if not impossible. We have always been an upper-tier club, and our members are typically more affluent than other destination club members.

We've created a consignment program that is only available to members. We've had members that would ordinarily upgrade their membership to a high level instead purchase nights from other members who are traveling less.

The Veras Group: What do you think the industry looks like in a year?

Addoms: Constraint creates innovation. I think in a year, Quintess will be part of an industry with far fewer destination clubs.

The Veras Group: What is the difference between Quintess's operating model and those of High Country Club and LUSSO who have filed for Chapter 7 and Chapter 11 bankruptcy respectively?

Ben Addoms: While I can't discuss the inner workings of High Country Club or LUSSO, both evidently lacked member capital and outside investors to continue operations. We are currently in talks with LUSSO to bring on both members and properties. While LUSSO goes through bankruptcy, nothing can be definitive, but we think there is a good reason for us to create an offering to LUSSO members.

***

After being contacted by several LUSSO Collection members, we reached out to Ben earlier today to see if we could provide any significant details regarding an offer to LUSSO and its members. In a short message, Ben stated "We are in touch with all the LUSSO members as of yesterday and the details of the offer are on a custom portion of our website. The offer is confidential and still subject to completing agreements and approval of the bankruptcy judge. Both of these are anticipated to happen quickly."

With LUSSO Collection members facing a bleak outlook on the future of their club, The Veras Group hopes that Quintess and Lusso can complete some form of an acquisition of both homes and members that allows LUSSO members to continue enjoying destination club travel in 2009. The industry has seen rocky times over the past several months and many destination club insiders have predicted consolidation for even longer. LUSSO and Quintess have long been rumored to have something in the works, and their similar home values and offering make Quintess a strong landing point for LUSSO Collection members.