Failure To Launch: The Abundance of Unlaunched Destination Clubs Across The Industry

By: Destination Club News
Date: December 11, 2010

Compass Destination Club. Moncasa Private Club Residences. CareFree Elite. In a top heavy destination club industry where Exclusive Resorts has more members than every other club combined, there remains an ever present flow of new players looking to carve out their own place in the sector.

A perfect storm of events has taken place over the past several years, making it even easier to launch a destination club. Real estate prices have declined drastically. Resorts and other luxury travel providers are looking for any way to survive, contributing their unused properties and inventory to start-up clubs promising to fill the rooms. A multitude of destination club bankruptcies has left thousands of former members without a club, attracting new clubs to try to capitalize on the low hanging fruit.

Despite these ideal circumstances for launching a destination club, a number of these start-up clubs have found that it isn't an ideal time to be running a destination club. While nearly every destination club is transitioning to a sustainable model where no new membership sales are needed, new clubs depend on this early club growth to cover even their most basic costs: office space, employee salaries, marketing literature. Those adopting a traditional destination club model where the properties are owned by the club also bear those significant costs, such as insurance, taxes, maintenance, furnishing, and more, all on top of the high purchase cost of the properties themselves.

Because of this, the destination club industry is littered with clubs that announced their introduction as the latest and greatest, only to fail to ever get off the ground. Diamante. Botiga. Emperum Club. Many of these clubs still have active websites, creating a nebulous state between actively recruiting new members and complete closure.

The Ultimate Escapes bankruptcy has left over 1,000 members without their upcoming travel plans, presenting yet another opportunity for new clubs to emerge. Many of the recently launched clubs appear to have legs, but time will only tell if they will become industry name stays or if they will be just the next Vita Luxury or Legacy Luxury, quietly fading out of existence with few, if any, members.

Joining a new destination club does come with its advantages: discounted pricing, special travel incentives, direct access to club executives. The risk being the club's ability to continue growing. If you are interested in joining a destination club, a good place to begin is requesting a free copy of our Destination Club Guide. Inside, you will find suggested due diligence questions to ask when speaking with a club and profiles on every club in the industry.