What Happened To Unlimited Destination Club Usage?

By: Destination Club News
Date: May 28, 2009

An early Private Escapes tagline was "Where you choose. When you choose." LUSSO marketed "your properties are available when you choose to use them." Private Retreats answered a frequently asked question concerning how often a member could travel with "As often as you like!"

For many of the early entrants into the destination club sector, clubs built their marketing plans on exciting verbiage like "virtually unlimited availability" and "intentionally underutilized properties." Members could travel whenever they wished as long as the home was available (and sometimes even when it wasn't in Private Retreats' case). With the destination club model foreign to nearly all of its potential audience, these terms helped convince early adopters the benefits of destination club membership.

On the surface, unlimited travel sounds like it would severely compromise availability, but the term is a bit deceiving. While members could travel on an unlimited basis, travel was restricted by a set number of nights that could be reserved at a given time. As the member traveled, those nights would come off the reservation system, and subsequently allow the member the opportunity to reserve more nights. This effectively restricted usage to a rolling reservation limit, requiring the member to continually make new reservations as they travelled. In addition, cancellation policies were created that prevented members from reserving properties and cancelling shortly before the departure date.

With Private Escapes merging with Ultimate Resort and LUSSO in bankruptcy, the unlimited membership plan has virtually been eliminated from the industry. Many clubs continue to offer unlimited space available reservations within a short term window prior to travel, but why have clubs discontinued this membership plan after it helped many clubs establish themselves within the industry?

Predictability

Each club closely monitors occupancy levels by many different metrics. Seasonality, per property, for the entire portfolio. All of these levels help the club form a more thorough understanding of annual usage and determine what destinations need more properties, how many properties must be acquired or sold, and various other tools that help determine the club's future. By offering an unlimited membership, this adds a level of uncertainty to these numbers. With a tiered membership structure where the number of nights is already known when the member joins, the club effectively knows the maximum effect that one member has on occupancy. In an unlimited model, determining actual usage is harder to determine and makes it more difficult to ascertain other important data points used throughout the club.

Confusion

As mentioned earlier, the unlimited membership plan can be a bit deceiving. While usage restrictions are in place, it may appear that members with unlimited plans greatly impact availability. Looking far into the future, availability is traditionally wide open at every club. Certainly as you move closer, availability gets less and less. Looking at availability as a prospect, a short term window coupled with preconceptions about the unlimited model may exacerbate the notion that unlimited travel is a deterrent to new members looking to travel under the guise that older members with unlimited plans dominate usage.

Unrealized Income

Lastly, and most importantly, the unlimited travel option limits the opportunities for receiving additional income from members. The service component across all membership levels at nearly every club is standardized, meaning that the number of nights is largely the only variable component. By having a tiered membership structure where more nights become available for higher membership plans, clubs not only can upsell members to higher membership plans that include more nights but can also charge for additional nightly usage once the member surpasses their nightly limit.

Private Retreats, Private Escapes, and the LUSSO Collection all grew to market leaders in part to unlimited membership plans. The problems that ultimately arose at Private Retreats and the LUSSO Collection had little to do with availability and more to do with the financial models of the clubs. Does the early success seen at these clubs open the door for another destination club to build their occupancy model around unlimited usage?

To offer your own thoughts and insight on unlimited destination club travel, discuss this article at DestinationClubForums, a free resource for prospects, members, and club executives.