Quintess Recognized As 2009 Destination Club of the Year

By: Destination Club News
Date: January 15, 2010

When looking back on the destination club industry in 2009, many may gravitate towards the negatives. High Country Club and Solstice Collection filed for bankruptcy and slow sales throughout the industry dominated discussions within the sector for much of the year, but 2009 did put several leading clubs in a contention for our inaugural Destination Club of the Year award.

Equity Estates posted another strong sales year as a result of their equity membership model. Ultimate Escapes became the world's first publicly traded destination club, the vanguard in what may be a popular club structure into the future. Despite not posting their traditional other worldly sales numbers, industry leader Exclusive Resorts still grew more than any other destination club in 2009. While all worthy candidates, we have selected Quintess, The Leading Residences of the World as our inaugural Destination Club of the Year.

Earlier this week we met with Quintess President Greg Eure and Vice President of Marketing Todd Miller to discuss 2009 and where the club is headed next.

"Philosophically, one of the things we really wanted to accomplish in 2009 was to show stability in an industry and economic environment that showed a lot of signs of instability," began Eure. "At the end of the first quarter, we said 'we wanted to get back in the business of selling memberships. We wanted to grow at a time when other clubs were not.' We wanted to further strengthen our financial position, and we spent much of 2009 communicating that to members and making sure that they knew where we were and what we were doing. We looked at the business compartmentally to figure out what the best way was to allocate things such that annual dues and fees cover members' travel costs, sales and marketing is paid for through the non-refundable portion of the membership fee, and our committed long-term equity investment covers the carrying costs on the real estate portfolio. A lot of the things that we did over the last year got us to this point."

When other destination clubs like LUSSO Collection, High Country Club, and Solstice Collection filed for bankruptcy, it became apparent that they had operational models that required a continual flow of new membership sales to remain in operations. When new membership sales slowed in 2008 and 2009, these clubs quickly eroded and a newfound focus on the financial components of the destination club model arose. While other clubs within the destination club industry are already or are working towards being able to cover the costs of the club through committed cash inflows, Quintess is the first of the major destination clubs to do so and we agree with Quintess that it is one of the only ways for destination clubs to move forward.

"For any industry, not just destination clubs, in the long term, if you are running at a loss, the model doesn’t work," said Eure. "You simply can't plan to grow your business at a loss," Miller added.

Moving to a break even model doesn't happen overnight. Late in 2008, Quintess reached out to members to seek approval for an increase in annual dues and the introduction of a per night occupancy fee. Roughly 96% of the club's members participated in the vote and 88% voted in favor of the increases. In an interview with Ben Addoms, Quintess's Founder and Executive Vice President, he told us, "Members understood that the alternative wasn't their best option."

In addition, Quintess changed their internal structure, moving travel planning services to their local hosts in a move that would reduce costs and be popular with members according to Eure. "At the beginning of the year, we decided to move travel planning. Previously, this was done by a centralized group in Colorado. We decided to move this out to our local hosts, which is something that our members had asked for for a long time. Now as a member when you are traveling to Napa, Aspen, or Tuscany, you have contact with someone who has their feet on the ground. They know the hot restaurants and festivals so we can now provide a better member experience in how members interact with the club on a more cost efficient level."

Other changes were made throughout the club in the name of efficiency and to reduce costs. "When we dove into energy usage at all of the homes, we made huge strides this year, which isn’t just good for the business, but just good in general," Eure continued. "Consolidating our billing processes, understanding at the circuit level in our homes how things are used and how we can make everything more efficient. It is something that we haven’t talked about much, but it is something we will be talking about and building into the product because people ask those questions. Every hotel has their own green initiative, as do we, but we have laid the foundation to take it up a notch during the past year. We are laying the foundation for smart homes where we can monitor so they perform accurately and where we will use our assets more efficiently. If the hot water heater was running, it may have taken us awhile to identify it, but now we are in a position to know instantly."

While the club was able to make these huge strides throughout 2009, Quintess also grew their club in arguably the worst economic climate in the destination club industry, surpassing the 500 member plateau.

"We had nearly 100 member transactions in 2009 with new memberships, upgrades, and folks coming from other destination clubs," Miller told us. "We went over the 500 member mark during the course of the year and are now moving towards the 600 mark. We like to think of ourselves as the Goldilocks of the destination club industry. We are large enough to offer the economies of scale but small enough that we can offer the personalized service and locations like Aspen, Canouan, and Napa that larger clubs can't."

Despite the positives the club took away from 2009, Quintess did comment on areas they thought could have used improvement on during the year. "We want to get our message out there about the value proposition of a Quintess membership," said Eure. "We want to cut through the noise. In 2009, with all of the focus we put into communicating to members our financial position, we wish we could have concentrated more on this message."

And that message is the advantages that destination club membership has over other comparable vacation options, namely second home ownership. “We want the industry focus to get back on the great experience and value of being in a destination club rather than just the financial component." said Miller, who is responsible for the club's marketing. "We totally understand why people have been concerned about financials over the past year, especially with what has happened over the past year with other destination clubs, but we are moving back to the experience. We want to market the benefits of a destination club over owning a second home with its maintenance and risks and why Quintess is the best option."

Quintess is currently working on some new initiatives that will make them a leading candidate for the 2010 award and have lofty ambitions for 2010 in terms of both membership and real estate growth. Check back soon for more information about Quintess, The Leading Residences of the World and we will name our International Destination Club of the Year in the coming days.