DC4MS

One very important factor in evaluating various Destination Clubs is the refundable portion of the membership fee.

Ultimate Escapes has a refund policy that states - "Should a member decide to leave the club we will resell their membership at 80% of the then current value, as detailed in the Club Membership Agreement."

This is a huge competitive advantage for Ultimate Escapes as their refund policy actually rewards members to maintain their current membership. Of course, it is difficult to try to predict the future value of a membership and requires an educated guess.

The key figure that potential members should be thinking about is 25% because that is the percentage increase of a membership fee that would allow members to get 100% of their membership fee refunded.

For example, if you join the Ultimate Escapes Elite Club - Bronze plan for the current May 2008 fee of $200,000, then your immediate refund will be 80% or $160,000. However, if the membership fee increases 25% (assume 5 years) to $250,000, then your 80% refund will be $200,000. Any membership fee increase over 25% from "your membership fee" will actually return MORE than what you originally paid. Therefore, if the membership fee increases 50% (assume 10 years) to $300,000, then your 80% refund will actually be $240,000 which represents a $40,000 increase in what you originally paid.

The challenge is to designing a "realistic" projection of the future value of the Ultimate Resorts membership fee. I am leaning towards a very conservative 5% increase per year. Thus, it will take five years to reach the magical 25% increase and a 100% refund of your membership fee.

*** There is also a 3:1 ratio of new member to resigning member that is NOT stated on their website. ***