The Ritz-Carlton Destination Club Redefines The Model

By: Destination Club News
Date: May 29, 2009

Ask the former members of High Country Club and LUSSO what the major problem with their clubs were, and most will probably indicate the security of their membership deposits. With real estate prices plummeting and club interest sagging, the financial models of both HCC and Lusso began to crumble and club members were unsure of what happened to their refundable membership deposits. The Ritz-Carlton Destination Club is looking to redefine the financial security of their new destination club.

"Our branding is a big advantage for us, but I think that the fact we are deeded in perpetuity is a totally different deal," said The Ritz-Carlton Destination Club's Linda Sciberras. "We are regulated by Florida statutes which sets us apart."

Many destination clubs continue to struggle with how best to protect member's deposits, often creating new ways to provide strength, with varying degrees of success. My Global Playground documented specifically how deposits were used in their membership agreements. Ciel allocated a portion of the membership deposit that would be used to purchase treasury bills that would be used when members resigned. The Ritz-Carlton Destination Club deeded approach is a first for the industry, taking a cue from a travel sector often compared to destination clubs, the timeshare industry.

Much like the timeshare model, joining the Ritz-Carlton Destination Club is "the member's asset" according to Beth Ridenour, the Ritz-Carlton Destination Club's Director of Public Relations. Members can sell their membership on the open market for whatever price they wish with the club having the right of first refusal. This allows for a far more liquid redemption process, allowing members the opportunity to sell their membership without having to wait for new membership sales, the model that most destination clubs currently act under.

Memberships begin at $130,000 and a substantial Founders offering will be available to the first 100 members. Members receive an annual allotment of points that are in turn used for travel. Each stay has a different cost based on the season, property, and day of the week. "If a member had 20,000 points, they can get a wonderful blend of experiences," said Ridenour. "In January, you could go to Abaco and stay in one of our cabana units for eight nights, spending 1,350 points. From there you could travel to our free standing, two bedroom homes in Jupiter for 14 nights in late February for 6,000 points. Then off to our two bedroom home in Aspen. Spend seven glorious evenings in March for 5,350. Then in June, stay in one of our two bedroom homes in Kapalua Bay for ten evenings for 7,300."

Much like Exclusive Resorts, members can purchase priority holiday access for an additional fee. "It is not a guarantee to a specific holiday, but it gets you priority access to holiday periods at the various properties. It gives you the opportunity to have greater access to those high demand periods," said Ridenour. The priority access upgrade is not tied to the membership when the membership is sold by the member.

To increase availability, members can also exchange up to 25 percent of their nights for hotel access. According to Sciberras, the club already has 65 affiliate hotels in the program and ultimately expect all but approximately four to be available to members for exchange.

"We have surveyed members and focus groups to understand what Ritz-Carlton loyalists want," Ridenour said. "If you had a second home, what would you want it to look like? What type of flexibility do you need? We went to them first and that is how this whole idea got started."

Long rumored to be entering the destination club industry, this foresight and dedication to learning more about their target consumer has positioned the Ritz-Carlton Destination Club in a strong position for the future. The Ritz-Carlton Destination Club also further validates a destination club industry that has seen too many black eyes recently. Clubs like the Ritz-Carlton and Abercrombie & Kent that bring decades of demonstrated service and financial backing may help lessen the barriers of entry when prospects begin analyzing if a destination club is right for them.