The Markers Club Relaunches

By: Destination Club News
Date: March 16, 2009

"We've had some organizational changes and we have a new private equity firm involved with our club," began President and CEO of The Markers Club, Michael Broussard in an interview with The Veras Group. "We are now moving forward in an exciting and innovative way."

Broussard, previously the Vice President of Member Services at the club, has been involved with The Markers since day one. "I've now worn all the hats at The Markers. I understand what works and what doesn't; we're taking the best elements moving forward."

The Markers Club, the first destination club in the industry to specialize on one specific travel theme, in their case luxury golf, was the first of several other specialty destination clubs, including High Country Club who originally focused on ski properties and Moncasa Caribbean Experience and their beach focus.

"Consumers are looking for a safe way to do things. Destination clubs are an industry that people want to be involved with. They love the lifestyle, but they don't want to get burned with their money," said Broussard. "I've been scratching my head the past couple of years about the model of the destination club industry. What is not working on this deal? The clubs have grown the past couple of years and each club purchased real estate in a market where they paid significant prices. Now values have fallen off and these clubs are failing because of so much debt, loss of value, and members with different expectations."

What is not working with the destination club model? This question led Broussard and The Markers' team to reevaluate the way both their business was structured and how memberships were sold. Over the course of several months the club found their answer. They would become a publically owned company, investing in distressed real estate, and change their membership offering to no longer include membership deposits, instead selling year to year travel privileges to members.

"I've dived into the model over the past couple of months with our team, and we have retooled our whole offering. A lot of people have added a lot to it," said Broussard. "We are ready to come out to the marketplace with a value proposition focused on our members and investors. Our members will have the finest accomodations in the world without the burden of financing the company through at-large and at-risk deposits. Investors will get to invest in the company which will eventually prove to be the greatest real estate opportunity of the century. We have the best of both worlds."

"We will offer the public a way to invest in the real estate side of our company. The goal of our public company is to take advantage of current economic conditions and purchase class A residences, hopefully at 30 to 50 cents on the dollar. According to every economic report you read, the opportunity is there now and is getting better for our current purchasing prices. We are excited for what our company is capable of."

"With this public company, we will buy real estate. Shareholders will buy our stock and the real estate will stand alone within the public company. There are going to be two things happening here. The first, the real estate will be held in the public company. The second thing is our members. Our members are not going to be required to pay a membership deposit. Our offering is $25,000 for our Links Individual and Family Membership or $35,000 for a Corporate Membership, with our memberships sold year by year. All that members have to be worried about is finding time to schedule a vacation and have a good time, not worried about stressing out about what is happening to the club's real estate portfolio and will they or will they not get their membership money back."

Links Individual and Family Memberships and Corporate Memberships will allow 30 nights of usage per year. Members will have access to the club's financials, a problem long attached to many destination clubs that are privately held organizations and not required to disclose financial information. As a publically traded company, shareholders will know "exactly what is going on."

"Our goal is to do this remodel right and that means financial transparency for all our members and shareholders," said Broussard.

"For current members, we are in the process of converting them to shareholders within our company. They are very excited about that and they are very excited to participate and help out and very relieved about that. Over time, the stock should provide them with return on the money they originally invested. We are also creating special founders positions for these members."

Broussard attributed the business model change to his close monitoring of the destination club industry. "When memberships were $300,000 to $400,000, it is almost like selling them a house. The sales cycle is so long. I follow the DestinationClubForums and The Veras Group's news and I saw what happened at M Private Residences. From there, I brought that back to our team and we kicked it around for 30 to 60 days saying 'how can we improve upon this?' We can now make a sale over dinner versus three to four months time beforehand."

In addition to the changes made to the business model, The Markers Club has transitioned its golf only focus to a more all encompassing, family lifestyle environment offering.

"We are focusing now on the full lifestyle. Golf is still a huge priority for us, but in addition to golf, we are offering tennis academies and will be a full service destination club focusing on the family lifestyle. We are developing multi-site destinations that will cater more towards families so that we can accomodate more people throughout the year."

While the club will expand their focus, golf will still remain at the forefront. Every Markers Club member automatically belongs to the Private Club Network where they receive access to 250 additional private country clubs across the United States. The Markers Club also offers a Marker's Troon Advantage Card that provides members discounts on Troon Golf. The club will also conduct the first annual Markers Cup this fall at Southern Highlands in Las Vegas on October 18th. Many of the club's Markers Club Player Council will be in attendence.

"We have been a strong player in the destination club field, but are still small enough that we can still adjust our business model to accommodate our members. Many other clubs are not able to do this because they are just too big to change."

As the DOW hovers around 6,500 and many flagship destination clubs have been forced into bankruptcy, The Markers Club has long term stability at the forefront of their mission.

"It's been a battle making it through the last little while, but we're really excited about the future. We feel that our success will be achieved through these changes. We have five years of history in the destination club industry and along with our new platform we are ready to move forward."

The long term sustainability of destination clubs have come under increased pressure in recent months with the bankruptcy filings of High Country Club and LUSSO Collection. As mentioned by Broussard, members will now no longer have to worry about the club's ability to repay membership deposits as the club will function on year to year memberships. By evolving the offering of M Private Residences and making their membership year to year, similar to a One Key World model but with a centralized real estate portfolio, Markers is taking the best components of other clubs to form this new business model. With recent industry happenings showing the flaws in the destination club model, the future of the industry resides in club's ability to persevere and adapt to economic changes.

As industry executives ponder the same questions that Michael Broussard and The Markers' team have worked through in recent months, it will be interesting to see if other clubs make similar moves to weather the storm. No matter what, the destination club industry will look vastly different from what it looked like 12 short months ago.