Executives Predict Tanner & Haley Bankruptcy

By: Destination Club News
Date: August 3, 2006

As hundreds of members try to decipher how Tanner & Haley, the pioneer of the destination club concept, filed for bankruptcy, executives within the destination club sector saw the writing on the wall.

According to our friends at Helium Report, Dennis Draper of Leading Residences of the World predicted a major club failure in 2006 while presenting at the Ragatz Associates Fractional Interest Symposium. Michael Beindorff, the COO at Exclusive Resorts, stated in Robb Report, "We don’t have lines of members that want out of the club and can’t get their money back. I think we’re going to begin to see that there are some clubs out there that have behaved a little irrationally and are going to have a very difficult time between now and the end of 2006."

Since Tanner & Haley filed for bankruptcy, current members and potential members alike have begun asking executives the hard hitting questions to confirm the differences between their clubs and Tanner & Haley.

According to bankruptcy documents, Tanner & Haley published many model flaws that contributed to their failure. As part of a "member focus" that guaranteed reservations to members, Tanner & Haley routinely entered into short-term leases to accommodate members when properties owned by the club were already in use. In addition, the club cited low membership costs, annual dues, and nightly fees.

Exclusive Resorts dominates the destination club sector, but young clubs like Private Escapes, Dream Catcher Retreats, Quintess, and Ultimate Resort have all attracted their own fair share of members, eroding the first mover advantage that Tanner & Haley enjoyed for so many years.

Like any other industry, as the destination club sector matures, there are bound to be more failures, emphasizing the need to conduct a thorough due diligence review of any club you may be considering.

If you would like to receive a free list of suggested questions you should ask when evaluating a club, request a copy of our Destination Club Guide.