Exclusive Resorts Steve Case Appears on CNBC

By: Destination Club News
Date: January 4, 2010

Today, AOL Co-Founder and former Chairman and CEO Steve Case appeared on CNBC to discuss his various ventures under Revolution, including Exclusive Resorts, the world's largest destination club.

When asked about Revolution, Case's investment firm that includes health care, transportation, and hospitality amongst others, Case stated the genesis of the ventures. "Why don't I focus on partnering with entrepreneurs who have great ideas in a variety of different industries, that have the potential to disrupt that industry by empowering consumers and giving them more choice, control, and convenience?"

Since Case found Exclusive Resorts while surfing the web, "disrupt" is a gross understatement about his impact on the destination club sector. A multiple second home owner himself, Case would discover the second home alternative and fill out a request for additional information, complete with AOL e-mail address, to the young destination club who had just sold their first membership a few short months prior. Within days, Case would be meeting with Exclusive Resorts' Co-Founder Brent Handler to discuss an investment opportunity.

"My preference is more of the Warren Buffett model," Case would say about his plans in the future for Revolution. "When we make an investment in a company our intention really is to be in it forever. We aren't looking to flip it, which differentiates it from traditional venture capital or private equity where they may be in for three or five years, but they have a clear plan to get out. Some of the companies we're involved in, like Exclusive Resorts which I am the Chairman of, I think I will be owning forever. I love that business and I think it has tremendous growth opportunity."

Once Case invested his name and capital to Exclusive Resorts, a new powerhouse in the destination club industry emerged. When Case first made contact with Exclusive Resorts in May of 2003, the club had approximately 25 members. Today the club counts roughly 3,500 members and has enjoyed a growth curve that hasn't been approached in the destination club sector. Just yesterday, our readers voted Exclusive Resorts the destination club of the decade. While the club has seen banner years in the past, like virtually every other club in operation, 2009 was a sharp decline in new membership sales as a result of the economy but according to Case, things are picking up.

"New sales have slowed," said Case when asked about how the club fared in current economic climate. "In the last five years, we have sold about $1 billion in memberships and 2009 was definitely our slowest year. We are seeing a bit of an uptick. December actually was pretty strong and I think some of it is the psychology. A year ago people would say 'The sky is falling. I shouldn't spend my money on anything. Maybe I should put my money in a mattress.' Now they are saying 'Maybe I should be a little more confident about the future, but I don't really want to go buy a home for $3 million and spend hundreds of thousands of dollars using it and only use it a few times a year. This Exclusive Resorts idea is a better idea.' My guess is we will have a decent year in 2010 and probably accelerate from there."

With sales in 2009 not following the brisk pace of recent years, Exclusive Resorts has begun a two year process that will allow the club to break even with no new real estate or membership sales.

"We recently restructured the way (annual) dues work so that in 2011 (Exclusive Resorts) will be break even without assuming any real estate sales and any new membership sales." said Case. "We are moving everyone to a common dues structure which is the way most country clubs work. I think there is a fairness to it and I do think for all the members it is also important to provide a sense of financial stability and security in terms of the core platform. We need to make sure the dues cover all the operating costs, even if we don't sell new memberships and even if we never make money on real estate. We think we will sell memberships and will make money on real estate, so there is probably more upside, but we want to protect the downside for not just ourselves, but also more importantly, for our members."

It is good to hear Case answer some of the more hard hitting questions about Exclusive Resorts and if you are currently evaluating destination club membership, you should ask clubs you are considering equally pointed questions. If you would like a list of suggested due diligence points, request a free copy of our Destination Club Guide.

If you would like to watch the video in its entirety, please click here.