Ultimate Escapes bankruptcy

Good News For The Vacation Homeless: Luxury Membership Options Emerge Following The Ultimate Escapes Bankruptcy

Demeure's Borgo De Vagli residence, Tuscany

For those of us who have followed the fallout from the Ultimate Escapes bankruptcy, it has been a bumpy ride. I have written about this bankruptcy before on Luxist, but here is a small refresher précis.

Ultimate Escapes was a high end, luxury, non-equity based destination club, and the second largest in the industry. Members paid between $150,000 and $800,000 membership deposit, and many thousands more in annual dues. For those fees, they took vacations to exotic places and stay in exceptional residences, villas and condos. There were over 1400 members when the club bankrupted in mid-September, 2010. It was then the fifth major bankruptcy in five years for the non-equity destination club space. Prior to Ultimate escapes was Tanner & Haley, Lusso, High Country Club, Solstice, and now this. For members, industry watchers and many others, this bankruptcy began a serious re-thinking process. What is the matter?

As with many complex problems, this one appeared easy to solve. Many believed it was the non-equity model on which literally all of the bankrupted clubs were based, and in part, but only in part, it was. The first generation non-equity model was broadly based on a kind of Wild West 2004-2008 YAHOO-type optimism: clubs will certainly grow if -- real estate values would appreciate, and if members continued to join. If this growth hormone were in place, and why shouldn't it be?.. then the members will receive what was promised to them: 80% of their deposits back upon resignation from the club, and the 3 in 1 out option borrowed from the timeshare industry: If three new members joined, you could resign. Simple. Seemed so reasonable in those pre-Madoff times.

And because it seemed so reasonable, and times were so optimistic, many clubs bought properties and others were leased when prices were at an all-time high. Then, suddenly, in October of 2008, the perfect storm appeared: real estate values declined, Bear Stearns and Lehman Bros. deflated. But no matter what, lenders wanted mortgage payments and lessors wanted their rent. With these occurrences, the first generation club model looked like a house of cards, easily toppled by the dark winds of a collapsing economy and potential members' deciding against joining any club, even, as one member said to me, "a church group." Thus, with this last bankruptcy, following much the same process as the others, many felt this was the last gasp for the non-equity based club.

BUT! The model is not dead: it is evolving....

Tags: Abercrombie Kent Residence Club, Boundless Journeys, Demeure Club, Destination Club, DUO by Quintess, Exclusive Resorts, Post Ultimate escapes Bankruptcy, Quintess, Second Home Destinations, Ultimate escapes bankruptcy

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A New Exclusive Resorts Holiday Offer: $10,000 Gift Card To Join Before December 15th

by Susan Kime (RSS feed) —

Filed under: Luxury Travel & Hotels

Real del Mar Residence, Exclusive Resorts

Members of Exclusive Resorts, the world's largest destination club, have long enjoyed a substantial list of white glove services over the years as part of their membership. With the holidays coming closer, Exclusive Resorts is rewarding new members who join before December 15, 2010 with even more services -- by giving them a $10,000 gift card to be used for private chefs, spa treatments, customized excursions, tee times, and more.

This offer is one that might tempt Ultimate Escapes members, as their club bankrupted in September. I have written about this bankruptcy on Luxist before. The members of this club, around 1400, have since received many offers from Demeure, Duo byQuintess and others. Though the $10,000 Exclusive Resorts offer is not specific to Ultimate Escapes members, it may provide more incentive for those who are not yet committed to any club or Villa rental service, and who still are searching for a destination club to join. Since their inception, Exclusive Resorts has maintained a membership satisfaction score in excess of 90% every year, demonstrating the care taken with each member.

Also, despite the poor state of the economy, Exclusive Resorts exceeded many of their goals for 2010, in terms of new membership sales. When the year began, Chairman Steve Case appeared on CNBC and said that a "decent" year was expected for the club. Since then, Exclusive Resorts has sold well over 150 new memberships YTD, with over 100 upgrades from current members. They have also executed their 100,000th vacation this year.

From the business side of the equation, Exclusive Resorts has also spent much of 2010 on reducing costs, an initiative that has them at or under budget for all major cost categories. Last December, Exclusive Resorts finished 2009 with their best sales month of the year. With this intriguing $10,000 incentive, 2010 may be just as lucrative.

Luxist is grateful to Destination Club News for referring this story to us.

Tags: Demeure, Destination Club News, destination club offers, Duo by Quintess, Exclusive Resorts, Steve Case, Ultimate Escapes Bankruptcy

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Another Destination Club Bankruptcy: The Latest On Crisis And Opportunity

by Susan Kime (RSS feed) —

Filed under: Luxury Travel & Hotels, Books

I have been writing about the Destination Club industry for six years now, and have covered the bankruptcies of Tanner & Haley ( Chapter 11 in July 2006), High Country Club LLC ( Chapter 7 in January 2009), Lusso (Chapter 11 in December of 2008 ) Everlands ( this wasn't exactly a bankruptcy, but they did cease operation, and Ultimate Escapes purchased their member list) and Solstice (Chapter 11 in March 2009.) For Luxist, I have written about Exclusive Resorts, Abercrombie & Kent, Ultimate Escapes and Quintess vacations. I have also written and spoke about the dark side of the charismatic idea in print and online. I also spoke about this idea back in 2006 at a NorthCourse Conference in Athens.

So, for many, though Ultimate Escapes bankruptcy news today is terrible, it is not shocking. Rather, in Yogi Berra's words, it is deja vu all over again, as there seems to be a well-known fissure in the non-equity destination club model, and this fissure is one that only four clubs ( Exclusive Resorts, Equity Estates, Quintess and Abercrombie & Kent Residence Club) have been able to patch successfully. This crack lies in assumption: that the economy will continue to grow, members will continue to buy into the clubs and real estate assets will continue to rise. As can be seen through any glass darkly, our economy has NOT worked this way, and many have lost more than just their shirts.

Tags: Charisma, charismatic ideas, Destination Clubs bankruptcies, Ragatz Associates, Ultimate Escapes, Ultimate Escapes bankruptcy

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