Demeure Updates Members On Ultimate Escapes Situation

By: Destination Club News
Date: December 23, 2010

For the past several months, Demeure has been speaking with Ultimate Escapes members after being named the successful bidder for the bankrupt club's assets. Nine former Ultimate Escapes properties and 139 Ultimate Escapes members have since joined the Demeure family according to Dan Nedelko, Demeure's Marketing Director. After countless conference calls, webinars, and e-mails, and the club is updating members about the status of the acquisition, including details about the Ultimate Escapes property porfolio and their plans for the coming year.

The most notable piece of information revealed in the club's State of the Community member communication is that Demeure will not be leasing or purchasing the remainder of the former Ultimate Escapes properties outside of the nine already acquired.

"Demeure is a service business. Our business model does not require us to own real estate directly," the club writes. "Instead, we generate capacity for Demeure Club through our fair exchange program and our sourcing program, which makes properties available in response to member demand. Joining a club that owns a significant amount of real estate can be a limiting experience and a risky proposition, as we've seen from the high number of bankruptcies in the destination club industry."

"Demeure did, however, purchase nine properties from CapSource according to the terms of the Ultimate Escapes bankruptcy. We had the option to purchase and assume the leases on many more, but declined after carefully evaluating the condition of and demand for those other properties. Many of the lease option properties were 'tired,' requiring significant upgrades and improvements in order to make them meet Demeure standards, or had been booked only rarely in past years."

The nine properties purchased by Demeure will be available for sale to members at the same price received from CapitalSource, Ultimate Escapes' primary lender. The somewhat disappointing news that many Ultimate Escapes won't be a part of Demeure means that CapitalSource will have to continue their efforts to sell each residence, but without the revenue that Demeure would have been paying to lease the properties. While the majority of the former Ultimate Escapes residences will not be included in the Demeure catalogue, over 250 properties are still available to members procured through more traditional channels.

Also of note, Demeure will be closing the Kansas City branch that formerly housed nearly all of the Ultimate Escapes travel planning employees. Some former travel planners will remain with Demeure, working from "virtual offices" offsite.

"We've been building Demeure and its infrastructure from our Canadian headquarters for the past three years. When we purchased the assets of Ultimate Escapes, we inherited an office in Kansas City that housed the entirety of their operations. Since it's unnecessary for us to carry the costs of two locations, we’ve decided to wrap up operations in Kansas City and scale our team accordingly. This means some former UE staff will not make the transition to Demeure. However, those joining our team are excited about Demeure and the changes we’ve introduced."

As 2010 comes to a close, Demeure will be turning their attention to catering on their members. "We know how difficult this whole process has been," said Dan Nedelko, Demeure's Marketing Director. "We have spoken with members who have been in tears who had their vacations canceled and membership funds lost. We realize that we have made some mistakes as well and want to fully demonstrate to our existing members that they made a sound choice financially."

Demeure told us that they will soon be introducing a "try before you buy" option to potentially sway some of the former Ultimate Escapes members who have elected not join at present and will be reengaging potential members following the end of the year. Check back soon for more up to the minute information about the rest of the destination club industry.