Holly Felder Etlin Discusses Future of Destination Clubs

By: Destination Club News
Date: October 4, 2010

We have contacted multiple leading destination clubs over the past several weeks, asking them about their vision of what the industry holds now that Ultimate Escapes filed for bankruptcy. Each has had their own perspective on the future of the concept, but we went to Holly Felder Etlin, a restructuring expert with ties to the sector, for her thoughts.

Etlin served as Chief Restructuring Officer at Tanner & Haley during their very public bankruptcy in 2006. She knew of the destination club concept prior to working with Tanner & Haley, knowing several members, and has since continued to monitor the destination club landscape, particularly Ultimate Escapes where many of the Tanner & Haley members ended up

"There are many that believe the destination club model isn't economical, except at the high end. When you add in the initial investment and annual dues, many feel that they don't get a solid return on their investment," said Etlin. "At Tanner & Haley, we went through the exercise of penciling in how much money it takes to break even on a destination club membership and it takes several years of hotel usage to equal the costs, but destination clubs are for those that want a second home, not a hotel."

"Members are extremely well versed business people," Etlin would add. "They understand dollars and cents. They benefit from not paying full price for the destination club service, but the model has to be explained. Clubs need to have scale, a minimum number of members. Annual dues also must cover the ongoing costs of the firm. If either of these falls out of balance, the club has a problem."

This is one of the problems that led to Ultimate Escapes bankruptcy. When new membership sales weren't flying off the shelf, the world's second largest destination club wasn't able to meet their costs.

The Ultimate Escapes bankruptcy will continue to progress in the coming weeks and months,