Demeure Acquisition of Ultimate Escapes Impacts Destination Club Sector

By: Destination Club News
Date: October 25, 2010

The 1,000+ members of Ultimate Escapes have watched the destination club sector with particular interest of late, learning about new clubs, special incentives, and rumors swirling about their bankrupt club. Industry executives have also kept their eye on the Ultimate Escapes bankruptcy with the planned growth of their own respective clubs in the balance. Now that Demeure has acquired the assets of Ultimate Escapes, those plans likely have been modified.

As is the case with many bankruptcies, rivals are quick to move to capitalize. Quintess, the world's third largest club prior to Ultimate Escapes downfall, wished to distance themselves from the rest of the field as the new number two. The club would launch DUO, a new club with a portfolio of $2 million residences. A special offer was introduced with large mark downs for Ultimate Escapes members. Second Home Destinations, a new club that had yet to even formally launch, also introduced a custom offer for members of the bankrupt club, creating a one year trial membership with no up-front membership fees. Exclusive Resorts, The Discovery Club, and others also made plays for Ultimate Escapes members amidst the chaos, but Demeure's acquisition changes much across the sector.

DUO anticipated that their first 100 memberships would be exhausted by the end of the month. Exclusive Resorts put a limit of 100 on their trial membership offered to Ultimate Escapes members. In addition to the High Country Club members for which Second Home Destinations was created, the Ultimate Escapes membership base was to be a large part of the new venture. While DUO and Exclusive Resorts may both reach their goals and Second Home Destinations may successfully bring in a large contingent of Ultimate Escapes members, the near term growth of all three will be put on hold as members continue their evaluation of Demeure.

Potentially the world's second largest club, Demeure breaks the mold on the classic destination club model where all of the real estate assets are owned by the club. Demeure instead allows members the opportunity to contribute their own vacation homes to the club's property roster, receiving discounts of up to 50% on their stays at other Demeure residences. The club has provided Ultimate Escapes members with a list of frequently asked questions, details of the acquisition, and other points of interest. We have spoken to Demeure Founder Peter Schwartz countless times over the past several weeks and he has pledged that keeping members apprised on all fronts is one of his most paramount missions, a solid first step in rebuilding the trust lost by the mismanagement at Ultimate Escapes.

Without question, the destination club industry and model are evolving, hastened by the Demeure acquisition of Ultimate Escapes. The core of the Demeure model is structured around members contributing their own vacation properties to the club in exchange for discounts at other residences. The recently launched Boundless Journeys describes their offering as "the best attributes of the destination club lifestyle with none of the high stakes risk," not owning any of the properties available to members. It is apparent that many believe the traditional destination club model to be antiquated, with too much of a risk for members. Will Demeure be the vanguard for a new wave of destination clubs to emerge with their own unique take on the model? What will that next evolution hold? Will today's new generation of clubs prove prophetic, steering away from the high costs of ownership? John Morley wrote "Evolution is not a force, but a process." The process that has brought the destination club industry to this point has long been in the works, but Demeure and their aggressive introduction to the sector is a force that must be watched.