Demeure Looks To Take The Lead On Destination Club Regulation

By: Destination Club News
Date: October 25, 2010

Last year, we spoke to Howard Nusbaum, CEO and President of the American Resort Development Association (ARDA), about the destination club industry. His message was simple. "I believe that destination clubs are largely foolish in fighting regulation." he stated. "Destination clubs are in a gray area right now from a regulatory standpoint. It is an example of the marketplace getting ahead of the regulatory environment. Just like the government doesn't want to put up a traffic light until someone gets killed." The Ultimate Escapes bankruptcy is the latest fatality in the destination club industry and now the question again remains will this latest crash lead to the traffic light? Demeure has been selected as the successful bidder for Ultimate Escapes and is currently in the process of educating members about their offering but Demeure CEO Peter Schwartz was able to break away to meet with us to let everyone know their dedication to regulation and disclosure.

"We know the history of the Ultimate Escapes members, and fully understand the apprehension that many have for the destination club concept after the bankruptcy at Ultimate Escapes. Our goal is to demonstrate how different we are from Ultimate Escapes and other destination clubs."

"Over the past three years, we have analyzed the mistakes of the industry and believe that we are closing all of the gaping holes. We have a trust account for members' funds with our contracts filed with a transfer agent that is enforced for the transfer. Simply, we are required to perform our contracts with members before we get their funds. To even be considered a qualified bidder for Ultimate Escapes, we needed to meet strict financial requirements, including an extensive review of our financial model. The core of that model is that we are a service based structure, which allows us to leverage better service and value and offset economic swings. Members will never need to pay hundreds of thousands of dollars to join, but will always be able to enjoy the same destination club experience of which they are accustomed."

"Candidly, we have been surprised that there has not been regulation or tighter controls on the destination club industry. We welcome whole heartedly the efforts to finally encourage all of our peers to conform."

A webinar for Ultimate Escapes members is fast approaching and many more details about the club's offering and model will be divulged. The message of financial disclosure and regulation will be a strong one for Ultimate Escapes members who have grown weary of the destination club concept after suffering through multiple bankruptcies, legal disputes, assessments, and more. Like the members of Ultimate Escapes, we are anxious to learn more about the club and their plans for both the near and short term, but this messaging is a long time coming with few in the destination club space ever able to put all the parts together. Schwartz has forwarded us off a copy of their documents for a review prior to the upcoming webinar, which we will dive into more thoroughly tomorrow. In addition, we we will profile Demeure's Board of Directors, including big names like John Bowey, the Senior Counsel and the immediate past Chairman of the Board at Deloitte & Touche and Paul McLean, former Ultimate Escapes member and Founder of Canada's largest privately held financing company, Maxium. Demeure has a similar mindset and today spoke about the corporate governance and principles they have set for their new club.

"You know we spent an extensive amount of time analyzing the pitfalls and limitations of destination club contracts," Schwartz concluded. "Canadian legal experts at Aird Berlis were enlisted over a two year period to ensure that the Demeure contract respected the customer, and addressed the holes common to the industry. We feel this could be a new template for a new Destination Club Association to consider."