Portofino Club Files For Chapter 7 Bankruptcy

By: Destination Club News
Date: May 28, 2008

One of the earliest entrants in the destination club sector, Portofino Destinations, has filed for Chapter 7 bankruptcy. Over the past several months, the club has been restructuring, liquidating club assets and attempting to convert members into investors as they transition to an equity based model.

During the past weeks, the club has engaged members in several conference calls and managed to convince some members to convert to an equity stake with the club, all the while denying rumors about a pending bankruptcy. In today's filing, the club lists no assets.

Portofino now joins their predecessor, Private Retreats, in the list of notable destination club bankruptcies. Joining Distinctive Retreats and Legendary Retreats under the master brand Tanner & Haley, Private Retreats was the world's first destination club and would grow to be one of the leading players in the sector. In July of 2006, Tanner & Haley filed for bankruptcy, citing a "members-first" approach that required the use of numerous short-term leases to meet availability requirements and low membership deposits, annual dues, and nightly fees that did not cover the club's operational costs.

While launched early in the history of the destination club sector, Portofino universally trailed behind their competitors. Tanner & Haley would ultimately reach over 850 members prior to their bankruptcy and Exclusive Resorts, founded in 2002, has become the undisputed leader in the sector with well over 3,000 members. Ultimate Resort acquired Tanner & Haley and their members in 2006 to become the industry's second largest club and have since merged with Private Escapes, who organically grew their club to nearly 400 members since their 2003 launch. Yesterday, the two clubs introduced their new master brand Ultimate Escapes. The cash strapped Portofino would be regulated to the back of the destination club industry.

At their peak, Portofino would count upwards of 75 members amongst their ranks, and with no assets listed in their bankruptcy filing, it appears that all will walk away from the club without their refundable membership deposits. If you are a member of Portofino and would like to offer your opinions and thoughts on this news or your experience with the club, please feel free to contact us at contribute@destinationclubnews.com.

The Portofino bankruptcy further shows the need for a significant due diligence review when considering destination club membership. If you are currently evaluating a club and would like a list of suggested questions to ask and a background on the industry, request a free copy of our Destination Club Guide.