The Florida Destination Club Model

By: Destination Club News
Date: March 9, 2010

Ultimate Escapes, the world's second largest destination club, is the largest club based out of Florida. To join, members pay a refundable membership deposit and annual dues for each year they remain with the club. The club in turn uses the membership deposits to purchase luxury vacation homes for members to access and annual dues to cover the club's annual operating expenses, including salaries and the various costs associated with owning multiple vacation homes around the world. Clubs like Ultimate Escapes fit in the most traditional destination club model, but in recent years, a growing number of new structures have emerged.

Equity based destination clubs tie some form of ownership of the club's properties or the club itself to membership and have gained an increased prominence over the past several years, most notably the Abercrombie & Kent Residence Club and Equity Estates stateside and The Hideaways Club and Rocksure Property internationally. Other new clubs have sought to reduce their total costs by not owning any of the residences available to members, providing access to luxury hotels and resorts through extensive partnership networks, including The Discovery Club and The Emperum Club. In addition, a surprisingly large number of all-encompassing clubs have been created with their own unique perspective on the destination club model.

These new membership clubs give members access to luxury vacation homes, exotic automobiles, watercraft, and private jets all under one membership. From the service side, these clubs market 365 day concierge services, spa treatments, private chefs, and limousine drivers available at your leisure. Members can even use the club to plan parties or procure body guard services. While each provides similar benefits to their members, strangely, all of them are based out of Florida. Properties available to members typically include Miami and South Beach, indicating a strong focus on recruiting Florida based members.

Clubs like Grand Legacy Club and Vita Luxury were among the first to enter the destination club sector, both including many of the same executives but with vastly different structures.

Grand Legacy Club would plan to own all of the club's assets. "Members of the Grand Legacy Club are the privileged few who are able to enjoy the many benefits of the Club and its facilities. Every member is an owner of the Club and its facilities and has use of the facilities at any time in accordance with the Club’s rules and regulations as contained herein." According to the club's frequently asked questions, "All club facilities and assets are owned by the Club without any debt or liens on any of the assets. The members own the Club exclusively and this structure ensures the perpetual longevity of the Club's existence and its proper management and operation. When accepted for the membership, each member receives a copy of a title insurance policy issued by TICRO Title Insurance evidencing their ownership of the club and the facilities." Amongst these amenities would be a collection of real estate, aircraft, cars, and yachts. The small club never progressed much past the planning stages and quickly ceased operations.

Vita Luxury would take the polar opposite approach to Grand Legacy Club and structure their club not to own any assets. A "fleet of limousines" would be on call for members' use 24 hours a day. Private jets would be available for $1,500 per hour with complimentary pilots. Each location would include watercraft, Bentleys, and/or SUVs gassed up and waiting for members. Despite the substantially different approach, Vita Luxury would face an identical fate to their predecessor Grand Legacy Club and quickly ceased operations prior to making any headway in the highly competitive destination club industry.

More recently, Elite Shares and CareFree Elite have launched, both offering members mansions, yachts, and luxury autos amongst their list of membership benefits. Because of their website being temporarily shut down early last month, we asked if Elite Shares had been shut down. Since then, their website has again been made operational, but repeated attempts to contact them have not been returned. CareFree Elite comes from CareFree Lifestyle, who has served P. Diddy, Ben Affleck, and Will Smith amongst others, but based on the lack of success from their predecessors, the future of their destination club venture is not assured.

In a still relatively small industry, why have four different destination clubs emerged, all offering virtually the same product, all based out of Florida? Is the Florida traveler that much different from others around the world? Maybe or maybe not.

With easy access to miles of beachs, Florida has long been a popular retirement and vacation destination. Coupled with a real estate market that seemingly never depreciated, and the Miami Vice mentality of fast cars, big boats, and beach bodies might be the first thing that comes to mind if you ask someone about the lifestyle in Florida.

Case in point, Thanos Papalexis, an executive for both Grand Legacy Club and Vita Luxury, was know for throwing lavish parties at his club's properties, wining and dining multiple women, and driving only the most expensive vehicles.

Unfortunately, the vast majority of Florida residents and travelers do not share the same ultra-luxury tastes of Mr. Papalexis, who was recently found guilty of murder. From the real estate side of the equation, because of the epic overbuilding in recent years, travel hot spots like Miami, Fort Lauderdale, and Orlando are all projecting price declines of over 30% in 2010.

As even established destination clubs continue to struggle to acquire new members, it is unlikely that any of these niche clubs will be able to make significant gains in the sector, marketing to such a small group of buyers and because of the financial position of many of their potential members. We are in contact with multiple new destination clubs that are planning their launch in the near future, and none are planning on implementing structures similar to any of these clubs.

If you would like to learn more about the pros and cons of the various destination club models, request a free copy of our Destination Club Guide.