Darin Gilson: BelleHavens To Abercrombie & Kent Journey

By: Destination Club News
Date: June 12, 2009

Late in 2003, a new destination club launched the first of a segment that is still growing today: equity destination clubs. BelleHavens had developed a new business model where members of the club collectively owned the property portfolio available to them. Fast forward to 2008. BelleHavens and Crescendo Residences, another leading equity destination club, are acquired by A&K to start their new venture, Abercrombie & Kent Residence Club. With BelleHavens taken in by Abercrombie and Kent, Darin Gilson, the mastermind and founder of BelleHavens, was optimistic about the future after some initial hesitations about his new partner in Abercrombie & Kent.

"I absolutely had questions about the Abercrombie & Kent name. Like many consumers, I didn't know all of the details about how Abercrombie & Kent was involved, or not involved, with Private Retreats," Gilson began.

While BelleHavens was the pioneer of the equity destination club model, Private Retreats was the pioneer of the entire destination club industry. Launched in 1998, Private Retreats’ unique value proposition quickly proved successful and CEO and Founder Rob McGrath began to look to partner. In August of 2003, Private Retreats entered into a licensing agreement with travel giant Abercrombie & Kent, allowing Private Retreats to market their club under the Abercrombie & Kent Destination Club name. After missing several payments to A&K in 2005, Abercrombie & Kent ceased their licensing agreement and Private Retreats was forced to quickly rebrand their club, naming themselves Tanner & Haley in dedication to McGrath's children. About 14 months later Tanner & Haley was forced into bankruptcy, and many attached the A&K branding to the bankruptcy despite the fact they had no say in the club's operations. Industry executives, Gilson included, quickly sent off notes to members emphasizing the differences between their operating models and that used by Private Retreats. Several years later, it was Gilson agreeing to partner with Abercrombie & Kent.

"Once I understood that it was purely a licensing and branding agreement, and that Abercrombie & Kent had no operational control of Private Retreats, I was very comfortable," Gilson continued. "In fact, A&K learned a great deal from the mistakes made by McGrath, and as they entered the destination club sector with the Abercrombie & Kent Residence Club, they structured things from the beginning to ensure that the Tanner & Haley problems would never occur.”

Abercrombie & Kent clearly had security at the forefront of their plan, and they employed the most robust and conservative equity model in the industry. "We recognized from the beginning that one of the inadequacies of the destination club sector was the lack of an equity model. Membership deposits are only truly protected when members own an equity interest of a separate entity which owns a portfolio of debt-free properties. That is the core of the model we pioneered at BelleHavens, and A&K adopted and then improved that model."

Commenting on how the Abercrombie & Kent acquisition came to fruition, Gilson attributed much to finding an established and credible partner to work with. "Two or three years into our history at BelleHavens, we felt strongly that in order for our business model and our club to be as successful as it could be, we needed to align with a branded player. My focus for the last year and a half at BelleHavens was just that. We built a good club with a great team. We were delivering on our promise and providing great experiences to members, but we weren't growing as quickly as we could. My focus was on aligning BelleHavens with a partner that could help take us to the next level. Candidly, we had discussions with various parties, but ultimately worked with Abercrombie & Kent and became very excited about rolling BelleHavens into the A&K family, mainly because they were huge believers in the equity model. When I learned that Crescendo would also be combined into the mix and we would start with a solid foundation of members and properties, turbo charged with the A&K brand and capital infusion, I believed that this would be a significant division of Abercrombie & Kent into the future."

Despite the initial caution, Gilson could not be happier with the choice to join with Abercrombie & Kent. "In retrospect, the timing was brilliant. We had a good equity model, but we wouldn't have the same resources we have at A&K and I am thrilled that we did it. I think I can speak on behalf of the former members of BelleHavens and Crescendo that they are likewise happy we made the transition, especially since so many clubs have failed in the past year."

Since the Abercrombie & Kent launch alone, leading clubs Lusso Collection, High Country Club, and Solstice Collection have all been forced into bankruptcy. "We will win by not losing," stated Gilson. "Our focus right now is delivering on our promise. We are going to take great care of our current members and strategically add new ones. We are continuing to look at opportunities, both organic and inorganic, for the club as appropriate. If there are failed clubs or other opportunities to explore, we clearly will and are exploring. Our rally cry for 2009 is to weather the storm and deliver a great experience to our club members."

Continuing in our next installment, Gilson will comment more about the plans and opportunities available to Abercrombie & Kent Residence Club.