Burn Me Once: A Destination Club Meditation

By: Susan Kime
Date: October 15, 2010

I wish I’d thought of this thematic idea but I didn’t – it was Ira Glass, creator of an intriguing radio program called This American Life. HIS idea - about what people used to believe and now don’t – was taken from an Edward R. Murrow series, originally broadcast in the 1950’s, called This I Believe. The theme of the programs dealt with famous people discussing what their beliefs are and why they believed what they do. In Ira’s updated program, average people discuss what they used to believe from childhood to adulthood and explained what events or circumstances made their attitudes change into what they are now.

Upon listening to one of these programs, I began thinking about the bumpy evolution of the destination club industry, a hybridized idea to begin with, combining the country club model and the fractional jet model, with both becoming the first equity based destination club model. A little over five years later, there are many who believe, given its history, the model is fiscally unworkable.

We have lived through four destination club bankruptcies in the past four years. Tanner & Haley, LUSSO, Solstice, High Country Club, and we are living through the most recent one, Ultimate Escapes. It is this last one, the second largest destination club in existence, with 1435 members, that makes many of us in media feel it is déjà vu all over again.

About 18 months ago, I wrote an article for FraxFinder, a website that dealt with all the news of the high end fractional interest/shared residence industry. It was written after the Tanner & Haley bankruptcy, and after High Country’s, and during the Lusso demise. I wanted to write about what members themselves used to believe about the destination club industry, so at the time, I enlisted the help of the now defunct Destination Club Forums.

It was here that I asked the members of this Forum, all of whom ran the gamut from ecstatically happy destination club members and advocates, to those who have been terribly burned by their club’s dissolution, what the industry and their particular club’s demise has taught them, using the This I Used To Believe idea.

The responses I received certainly bear re-examination. I received many responses, some vitriolic, some subdued, but one of the members, Caribbean Sun, wrote out a very detailed list of before/after beliefs. It seems to me these showed a snapshot of the general assumptions, beliefs and expectations of most all of the members, both before the DC experience and after. It is just as relevant, even more today due to the latest demise. Here is the list:

1. Before: People are inherently good and will do the right thing.
   After: People will almost always screw you over for their own benefit.
2. Before: Contracts are enforceable.
   After: Contracts are part of the lie.
3. Before: Give people the benefit of the doubt.
   After: Trust your instincts and don’t sway from them without overwhelming evidence.
4. Before: People will see the truth.
   After: People will believe the most outrageous lies.
5. Before: Buy and hold makes sense.
   After: Buy and Hold makes no sense.
6. Before: Investment advisors must know what they are doing.
   After: I’ll manage my own assets

The After assumptions are the operational consequences of having lived through deeply failed expectations, lost money, and a long, painful awareness that what they were told in apparent good faith, just was not true.

It would be impossible for members not to become skeptical, about the viability of the model itself. But still they joined, because the vision of a great vacation, of happy family members, of golden times often overrode the awareness that their club was having problems. There was always hope.

It is complicated to abandon hope, and especially when hope involves something beautiful and needed – like a vacation. It is also important to remember that all anyone wanted from a Destination Club was to have a great vacation, in a beautiful residence with everything taken care of. That is what the High Country members put their $70,000, and what the Solstice members put their $2.1M down for. Those seductive dimensions of peace, sanctuary, risk, adventure, and hope all played out in exquisite residences played into the immediate monetization of a small industry, allowing it to move from a modest $513,000,000 in 2004 to a $2.1B industry three years later. But this was before.

What happens now, after the fall, after the bankruptcies, allowing the acquisition of a new normal, deeply misgiving and mistrustful, garnered from what we all used to believe? Would the Ultimate Escapes members trust enough to join another club? They must know that it is not the club concept that is at fault.

Member and potential member mistrust of this industry lies on many levels: having been told they could talk to any corporate person anytime, to discover they couldn’t, that the homes were on average $3M when the assets turned out to be, on average, much less? Having been told that they would receive between 75-80% or more of their deposit back after a number of years or when three or four others joined, learning this was not true, and on the access side, having been told they could have almost anytime access to the homes they could use, then find out anywhere/anytime access was just not true? What was true? The joy of the vacation experience. That was true.

As I said before, this UE bankruptcy feels different from the others, and the reactions of the members look different also. Of course, there are those UE members who will join other destination clubs because they are used to the residences, the club culture, the level of ease and comfort, and, at the end of the day, they may feel it is, as the old saying goes, "better a devil you do know than a devil you don’t." But there are others, like the UE members on the Timeshare User’s Group (www.tuggbbs.com), who have brought up points that that bears serious reflection, as they are more proactive than before.

I've moved on. I already made alternative arrangements for my November UE trip, and I'm already starting to make new plans for spring break and next summer. It's not such a scary world out there without a destination club. There is a lot that I will miss about UE (and not just my deposit), but it was already getting frustrating not feeling sure if my future reservations would hold up. Burn me just once, thank you.

The issue about moving on may (always) be a very healthy thing to do, and now there are many options that exist to do just this. The Villa rental/club companies are one: Private Trade Winds, Demeure, and Villazzo are three that have exceptional properties. Private Trade Winds has a travel agency associated with it, Demeure uses a fair exchange option which allows members to pay for their travel using time in their own properties. And the Demeure members can form private chapters within their home rental/exchange community. Villazzo calls many of its larger Villas, VillaHotels, because of the amenities found in smaller boutique hotels. All are different options for a frustrated destination club member to consider, all have well-curated professionals to help with activity options within the chosen destination. There are destination club amenities associated with all these entities and clubs, yet you don’t have to pay great amounts to join or to rent.

What has occurred to many, judging from comments above relates to what they used t believe and what they believe now: What they used to believe? The destination club experience could be garnered only by a destination club. What the emerging belief seems is that the experience can be garnered, less expensively by other means also. This is not an either/or, it is an also.

Finally, as usual, after each of these destination club bankruptcies, Tanner & Haley in July 2006, to Ultimate Escapes in September 2010 – a little over four years, with this fifth bankruptcy, this might be time to raise the possibility again of having some industry regulation, similar to timeshare. At the end of the day, four years and five bankruptcies later, the destination club industry seems almost like a cottage industry still: bumpy roads, potholed by classic mis-matches of revenue and expense.

Finally: two sides to this question – the first, there are still destination clubs out there that are viable, the other side: it is only a matter of time until they deflate also. Which side has more verisimilitude? Which will be, in a few years, what we used to believe? Stay tuned, but with this awareness: Burn me Once, Shame on You, Burn Me Twice, Shame On Me.