The Death of the Ultra Luxury Destination Club

By: Destination Club News
Date: July 9, 2010

For the past decade, destination clubs have catered primarily to the affluent, giving members multi-million dollar vacation homes around the world, white glove hospitality services, and partnerships that include everything from private jets to medical care. With clubs like Exclusive Resorts showing unrivaled success, a new flock of ultra-luxury clubs were created, looking to further enhance the destination club experience with more grandiose residences, better availability, and more tightly guarded memberships, reserved exclusively for the most elite of the elite.

The Solstice Collection led the way, planned originally to include just 42 members. Parallel would come soon thereafter, followed by The Yellowstone Club, Everlands, and Ciel, often charging well over $1 million to join. In time, ultra-luxury destination clubs would outnumber the value priced clubs at the other end of the spectrum.

Each of these clubs would achieve different levels of success, but the common denominator for each is that none remain in operation today. The Solstice Collection, the most successful ultra-luxury club, expanded to include nearly 100 members and would file for bankruptcy early in 2009. More recently, the sector saw the launch of The Southridge Club, a Palm Springs based club with a per night cost of $10,000. In less than four months, the club would cease operations, totaling just one member. Since the closure of The Southridge Club in early November of last year, the ultra-luxury segment of the destination club industry has remained vacant. In the eight months since, we have spoken to countless club's planning on launching, but none are targeting the ultra-luxury segment.

The question must be asked: Is there a place for these ultra-luxury clubs?

Destination club membership is often a replacement for second home ownership. When Ciel identified their target audience, they stated that their members would likely already own second and third homes. With a handful of luxury vacation homes already available to them, the destination club experience can lose its luster. In addition, destination clubs are already designed for the affluent, already a small segment of the populace. Again using Ciel as an example, their target member had a net worth of over $30 million, a group of individuals that make up just 0.001% of the world's population, an infinitesimally small group to build an industry around.

Despite the small market size, there will likely be others, if not many others, that enter the industry as the economy recovers. $10 million vacation homes, anytime vacation planning, and the exclusivity of the world's finest country club can be a strong pull.

Until that launch, feel free to learn more about the current crop of destination clubs in our Destination Club Guide, a free resource for potential members about the benefits and risks of membership and profiles of each of the leading clubs.