The Discovery Club Provides Their Outlook On The Future of Destination Club Industry

By: Destination Club News
Date: November 3, 2010

Amidst the chaos within the sector, every destination club is striving to provide members more security on the funds paid to join, but with vastly different plans in place. Some clubs are focusing on pure ownership, where members own the club properties or the club itself, often debt-free, greatly reducing the financial hardship of purchasing multiple vacation residences. Others are moving in the polar opposite direction, pledging to never own any real estate, giving members the same luxury travel experience as other destination clubs but without the large costs of purchasing assets.

The admittedly biased Discovery Club provided their opinions on where they see the destination club model evolving in regards to ownership in the coming years.

"I believe the industry will move towards 'owning' less, and instead improve their value proposition to members while reducing perceived risk," said Tyrone Lingley, the club's Director of Sales. "Carrying debt is a huge risk as we have outlined."

We spoke to Lingley last month about their no ownership model and how this structure allows them to avoid the high purchase costs of real estate as well as maintenance, debt service, furnishing, and others. Instead, The Discovery Club uses membership deposits to invest in a variety of industries to better weather poor economic conditions.

"There is a lot of glamour involved in our perception of 'ownership,' but this paradigm is shifting," he continued. "People are becoming less interested in owning assets with substantial financial and mental costs. What they really seek are exceptional travel experiences that make their lives better. Who wants to own a house with several hundred other people? Then that house declines in value with outstanding debt, creditors come knocking at your door, and all of you have to decide what to do. That is a nightmare and there are thousands of traditional destination club members who are facing this situation."

"Clubs who didn't leverage too much debt should be fine, but things will never be the same again. Acquiring new members will be an uphill battle in the next few years, but there will always be a market for catering to the needs of high-end travel travelers. Once the industry places their focus back to servicing these needs and not on owning things with huge debt, we should see progress as the economy begins to stabilize."

Demeure and Boundless Journeys Club, two new entrants to the destination club space, share a similar philosophy as The Discovery Club. Demeure is built around members contributing their own vacation properties into the portfolio in exchange for both rental income and discounts at other participating residences. Boundless Journeys Club partners with property owners, developers, resorts, and investors for their property collection, and just yesterday announced their initial property portfolio.

The Ultimate Escapes bankruptcy is changing the destination club landscape but there are no crystal balls to look into about the future. This uncertainty shows the requirement for substantial due diligence if you are considering destination club membership. If you would like to receive a free list of suggested questions to ask a club you are considering, request a copy of our Destination Club Guide, your free resource for purchasing a destination club membership.