Opportunities For The Destination Club Industry

By: Destination Club News
Date: April 8, 2009

Last month, we profiled several Threats to the Destination Club Industry. While the industry does have some obstacles to overcome, there are several opportunities that clubs at all levels can capitalize on in the coming months and years.

Real Estate
High Country Club's Christian Kirschner stated that his club had seen drops in real estate value of up to 50 percent. Richard Keith at Ultimate Escapes has said 20 to 30 percent dilution. With real estate prices seeing significant drops, the market is prime for buyers. In our interviews with both Equity Estates and The Markers Club, both have plans to add stressed real estate into their respective portfolios at steep discounts.

For clubs that do need to liquidate properties to either rightsize their member to property ratio and/or costs, they can look inside their club to move properties. According to Richard Keith in a recent interview with Bloomberg, "Members become the most interested buyer, so we probably won't even go to market with these (properties). There are people that have fallen in love with destinations and certain residences and that is likely how that will play out."

Partnership Opportunities
Bankruptcies by U.S. businesses increased 78 percent in the last quarter. With nearly every industry being negatively impacted by the economy, destination clubs certainly are not alone as they combat the worldwide recession. As clubs look to supplement their value without incurring costs, partnering both with other organizations inside and outside the destination club industry can be very advantageous. The Oyster Circle and Quintess, LRW partnership allows members of both clubs the ability to travel to the other's portfolio of luxury real estate. We just spoke to David Keuhner from Destination Cellars about a recent trip Exclusive Resorts' members made to the Rudd Winery as part of the Destination Cellars and Exclusive Resorts partnership.

The well heeled membership base that compromise most destination clubs could be a thrilling opportunity to pursue for many other companies outside the destination club industry. Cruiselines have seen monumental drops in the past quarter. Hotels and resorts have seen a similar decline. Many service base industries could also apply their expertise to the destination club sector and greatly augment the destination club experience. The opportunities are strong for destination clubs to augment their travel industry colleagues’ offerings, while simultaneously expanding benefits for members.

Educated Membership Base
With marketing costs cut across the industry, destination clubs will continue to be increasingly dependent on referrals. As each club's offering is being more thoroughly analyzed, members and prospects alike are learning more about the inner workings of the model. By being forthright with additional information to help members understand how the club works, each club will effectively create their own sales division.

Equally important, the knowledge base of members is massive, and clubs would be wise to tap into this enormous pool of ideas and thoughts. The savvy and intelligent membership bases, more so than many industries, should have great insight into the challenges and opportunities of each individual club.

Castoff Members
In a recent conversation with Quintess Vice President of Marketing and Sales Todd Miller, he confirmed that the club had brought in several LUSSO Collection members following that club's bankruptcy. Upstart Paragon Destinations is founded by Jason Bindra, a former High Country Club member, and has already sent Paragon's offering to High Country Club's membership base in hopes that they will give the destination club experience another try.

Between the clubs that have been forced into bankruptcy and those that have simply ceased operations, hundreds of members have been left by the wayside. Many industry representatives still consider "education" the number one concern in selling their club, and with these former members already knowledgeable in the industry potentially looking to continue traveling, clubs have the opportunity to win over these former members and could even replace unsatisfied members currently on each club's resignation list.

With the Dow near 8,000 and the destination club industry seeing its first quasi-stable month since late in 2008, the bottom may be near.

What other opportunities does the destination club industry have in the future? To provide your own input and to discuss further, sign up free at DestinationClubForums to discuss every destination club happening with prospects, members, and industry executives. For unbiased and complimentary assistance on your destination club purchase, contact us.