Is Singapore The Next Great Destination Club Frontier?

By: Destination Club News
Date: March 1, 2010

Since gaining their independence from Britain in 1963, Singapore has quietly transformed themselves into not only a popular tourist destination, but also a growingly affluent nation in terms of total GDP and on a per capita level. Over the past several years, unemployment has declined to as low as 1.7% in 2007 and now sits at just 3% despite the worldwide economic climate. The country's per capita income rivals that of many European nations and 90% of citizens own their own homes. Based on this sizeable growth, the region has quickly become a target for the destination club industry.

Last year, The Hideaways Club opened a new sales office in Singapore and Hong Kong to better market in the region. "We are well aware of the number of high net worth individuals that reside in both Singapore and Hong Kong," Mike Lamb, The Hideaway Club's Managing Director in Asia, told us last year. "Naturally for The Hideaways Club, these type of individuals fit the profile of our members - namely Chairmen, CEO's, FD's, Investment Bankers, partners of Law Firms and Medical Practices, Entrepreneurs, etc. For those who are looking to place funds into a global property portfolio with sensible returns and can see the value of subsidized luxury vacations, The Hideaways Club represents a unique investment opportunity."

2009 also saw the introduction of the first Asia specific destination club, LUXLife. Limited to just 399 members, LUXLife offers memberships between HK$1.4 and HK$4 million and represents "an enduring, safe, prudent investment, a lifetime of luxury lifestyle fulfillment and family memories," according to Gary Ferraro, the Founder of LUXLife. Designed exclusively for the region, the club's property portfolio "has been devised to be of special appeal to primary residents of Hong Kong and Singapore." According to the club, nearly all of the founding memberships had been committed to just a few short months following their formal launch.

When Secure America Acquisition Corporation (SAAC) and Ultimate Escapes announced their business combination last year that made Ultimate Escapes the first publicly-traded destination club in history, SAAC reviewed the outlook for the destination club industry. Stating that the "luxury destination club market is still in its infancy," SAAC would go on to publish their belief that "clubs will continue to form in Europe and Asia, as well as existing clubs expanding their presence internationally to address greater affluence and future high growth markets in Europe and Asia." Not surprisingly, Ultimate Escapes management listed expansion in Europe and Asia in the "Growth Strategy" section of the document.

Despite the rapid financial growth Singapore has created in recent years, is it prime for the still relatively unheard of destination club concept? The model still has a market penetration in the single digits regarding awareness around the world and totals just a few thousand members. Clubs like The Hideaways Club and Rocksure Property have demonstrated success in Europe, but alas, Asia is not Europe. Singapore walks the fine line between new financial power and old world mentalities. On one hand, the country has dedicated themselves to architecture, education and health care. On the other, bans on chewing gum, caning for graffiti, and death for drug smugglers have led Singapore to be known as "Disneyland with the Death Penalty." More so, birth control policies introduced in the late 1960s continue to weigh on the population. As a result of these old world philosophies, Singapore has a fertility rate of only 1.28 children per woman, far short of the 2.10 needed to maintain the population and the third lowest in the world, despite the introduction of a "birthing bonus" created to help rectify the problem. Combined with the fact that roughly a quarter of the population is foreign born, what is the future for the next generation of Singaporeans?

Clubs have already conducted their evaluation of the market and it seems that destination clubs will continue to make forays into the region, as evidenced by LUXLife and The Hideaways Club. More established players like Exclusive Resorts and Ultimate Escapes may also solidify the destination club presence in Japan, China, and Singapore in the coming years, but as sustainability has become the new rallying cry for the sector over the past year, expansions into these other global powers may take longer than previously expected.

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