Phoenix Club Introduced To High Country Club Members

Date: August 18, 2009

High Country Club Members,

I am a bankruptcy lawyer in Denver, Colorado and I represent a small group of High Country Club (HCC) members and creditors. My clients believe that their investment (as well as yours) will be lost, if the bankruptcy of HCC continues its normal course, and no steps are taken to reorganize and reconstitute the Club. My clients have pledged a substantial sum of money to attempt to bring the Club out of bankruptcy and assume much of the property debt. But before going forward with those efforts, my clients need to know if the existing members of HCC would want to participate as members in the reconstituted Club.

Today, former members of High Country Club read this introductory passage in a two page letter from Thomas Quinn, a bankruptcy lawyer representing a group of members and creditors looking to launch a reorganized form of High Country Club, fittingly branded as the Phoenix Club.

In January of 2009, High Country Club, once one of the fastest growing destination clubs in the sector, filed for Chapter 7 bankruptcy, leaving 375 members without a club, each with virtually no indication of the state of their refundable membership deposits. While quick to mention that under the proposed reorganization plan of the Phoenix Club members will not receive the membership deposit back paid to High Country Club, they will provide the same vacation experience for a lesser cost.

Needing approximately 200 of High Country Club's 375 members to make four weeks of reservations annually for the model to be viable, the Phoenix Club provided a general overview about the proposed club structure.

The details provided about the Phoenix offering include:

  • Members will have access to the former homes of High Country Club, subject to mortgage lenders lowering interest rates
  • Members will not pay a membership deposit, annual dues, or be subject to any hidden fees
  • Members will make four weeks of reservations annually and pay a predetermined weekly rate based on the properties and time period selected
  • Members will be required to pay 60 days in advance of the trip
  • If a member elects not to pay 60 days in advance of the trip, the property will be released to other members and the initial member will not be charged anything
  • If a member must cancel a trip and the club can find another member to book the property, the club will refund 90% of the reservation funds
  • Phoenix will model their club to have an occupancy rate of "70% or higher"
  • The club plans to market to individual outside the High Country Club membership base after HCC members have had the opportunity to make their reservations
  • Members will pay a weekly cleaning fee, expected to range between $100 and $250 per stay
  • Interested parties likely will be asked to make a $1,000 deposit on reservations that will be held in escrow

With the results of the High Country Club bankruptcy still up in the air, it is difficult to gauge what the future holds for the Phoenix Club. Only time will tell what the final decision will be regarding HCC's bankruptcy, but the Phoenix Club has already identified some strong selling points, but left some questions unanswered in their initial offering.

Positives

Reaching out to nearly 400 individuals who may have lost significant membership deposits to High Country Club and pitching a new and unproven destination club may be an uphill battle. The Phoenix Club's no membership deposit, no annual dues, and no hidden fees policy does greatly reduce the barriers that many potential members may have in the new club. Escrowing reservation deposits also will go far to help build trust in the club's potential members.

Proactively stating that the new club will work with mortgage lenders to lower the interest rates on High Country Club properties is a requisite step if the club and their reorganization plan has any chance of success.

Questions

There is only so much that can be communicated in a two page introductory document, but there are many questions that still need to be answered regarding the Phoenix Club. Hopefully the club has already considered many of the following and will release additional information about the club's structure as they and the High Country Club bankruptcy move forward.

  • Who is behind the club?
  • How does the club plan to make money?
  • Are properties available exclusively to members? If they are not, how does the club plan to market the properties to non-members to achieve occupancy goals?
  • What services are provided to members? Pre-trip planning? Local concierge support?
  • Will non-High Country Club members pay more for their membership?
  • With no binding agreement between the club and members, what happens if a group of members does not make their reservation payment and let their nights be released to other members, causing a surge of excess inventory and no new funds?

Evaluating a destination club can often be a lengthy process. To receive a free list of suggested due diligence questions you should ask when speaking with a club and an overview about the various destination clubs and business models used in the industry, request a free copy of our Destination Club Guide.