Destination Club Levity: Ultimate Escapes Too Bankrupt To Announce Bankruptcy

By: Destination Club News
Date: December 7, 2010

Last month we profiled the various inaccuracies in the media coverage of Ultimate Escapes bankruptcy. Some organizations misspelled executives names, others didn't know what Ultimate Escapes even was, adding some degree of humor into an overall tragic bit of news.

Recent bankruptcy documents have shown that Ultimate Escapes was actually so in debt, that they were unable to send out a press release to announce their bankruptcy. Working on the press release for a number of hours, CRG would speak to Jeff Sparks, Ultimate Escapes general counsel, about the "lack of ability to issue press release due to non-payment to public relations vendor."

This somewhat comedic dilemma is a microcosm of the financial irresponsibility at Ultimate Escapes. High executive compensation, a bloated roster of directors, multiple redundant offices across the United States.

While arguably the most transparent destination club in operation as a result of their public structure, the communications from Ultimate Escapes to members was, at best, suspect. In January of 2009, the club announced a mandatory one time assessment. During that same announcement, it was also revealed that the merger between Ultimate Resorts and Private Escapes, one that had long been believed concluded, had never been finalized. This strongarm approach would come back to haunt Ultimate Escapes when the club announced their crisis earlier this year. CEO Jim Tousignant introduced a partially member owned conversion plan to members in the eleventh hour, one that club members quickly voted down knowing that the club's executive team would remain in place with many of the same problems unsolved.

Some members have joined Demeure, the new DUO by Quintess, and the other options available across the destination club industry. Many more will likely abandon the destination club model altogether. Even if the sector doesn't endure another bankruptcy, it will be years before the health of the space is restored. Fortunately, many of the newer clubs are adopting more secure models where properties or the club itself are owned by members. While these models don't guarantee success, they do limit the potential fallout if the club isn't able to survive.