Rocksure Property Real Estate Acquisition Philosophy

By: Destination Club News
Date: February 22, 2010

Last week, we profiled one of the many concerns that face destination clubs new and old: when should properties be purchased? Some clubs purchase their properties in anticipation of new members joining, making the recruitment of these new members far easier, but drastically increasing the club's costs. Other destination clubs elect to grow their property portfolio in unison with new membership growth, only purchasing a property after a requisite number of new members have joined, but how does the club recruit these new members if the club doesn't already have properties available for members to access?

We spoke to David Rogers of Rocksure Property, one of Europe's leading destination clubs, to discuss this problem and the philosophy that he and his club follows.

"We have never in five years bought a property without having sufficient Shareholders' money to cover the purchase price and related costs, including furnishings, in the bank in advance," began Rogers. "The reasons are partly because we don't think that our Shareholders have signed up to us taking that kind of risk on their behalf, partly because we don't want to add mortgage interest to the normal running costs of the properties, and partly because we have proved that we can buy better if we can offer full payment in cash to the vendors. Our investors pay 100% cash up-front to us and we pay 100% cash to the vendors."

This mindset echoes the vision of many of Europe's other destination clubs where "ownership" is typically an integral component of membership. While a growing number of US destination club are now offer some form of ownership of either the club's properties or the club itself, the traditional destination club model is a non-equity structure where members purchase a "right to use" membership rather than any ownership stake.

The structure used by Rocksure Property where residences are not purchased until the club has membership funds in hand has helped lead to the creation of Alpha, Bravo, and Capital Funds, three clubs within the Rocksure Property architecture, each with their own property portfolio and members.

While launching a destination club with a small property portfolio may be difficult, especially with industry titans such as Exclusive Resorts and Ultimate Escapes offering members access to hundreds of properties, it has been done before. Richard Keith, the Chairman of Ultimate Escapes, recalls the early days at his former club, Private Escapes. Launching with just one Colorado ski property, Private Escapes outlined the destination club model to a potential member, discussing the vast property portfolio that would be available to them as a member. The caller would stop and confirm that the club only had one property and asked, "Shouldn't it be called Private Escape?" The young club would become the world's third largest destination club and is now a part of Ultimate Escapes following an acquisition that took place last year.

Rocksure Property has followed a similar model and is continuing to see the benefits. "It's a policy which we established right at the beginning of Rocksure's business and events of the last 18 months have made us very thankful for it, as you can imagine!" Rogers would add.

If you would like to learn more about how Rocksure Property compares to other destination clubs and learn more about the destination club sector, including the benefits and risks of membership, request a free copy of our Destination Club Guide.