DC4MS

Introduction of LUSSO 21

LUSSO is really excited about repackaging of their Group and Corporate Memberships and the simplicity of going down to two plans versus three.

In light of how most Destination Clubs are adding plans, it keeps in line with the boutique model and offerings yet simplifies options to prospective Members.

DC4MS

Introducing LUSSO 21

In an industry where other clubs are offering a multitude of confusing offerings, LUSSO is continuing its boutique approach by actually simplifying its membership plans to better serve both Members and prospective Members.

We are repackaging the group and corporate membership to the LUSSO 21 plan. Our goal is to further simplify our plan structure and make this repackaged product more accessible to prospective members. As before, this plan still has a cap on annual property usage and the number of memberships available under this plan will be limited, similar to previous group and corporate offerings. And, all Members continue to enjoy the benefits of being part of a boutique club-a level-playing field for reserving properties, highly personalized service, unique amenities, spectacular, "cherry-picked" homes, and unprecedented availability.

DC4MS

Introduction of LUSSO 21

Q: Why are you offering LUSSO 21?
A: We are repackaging our Group and Corporate Membership plans into LUSSO 21. By going from three plans to two (LUSSO Unlimited and LUSSO 21) we have simplified our offerings.

In addition, we have received many inquiries from people who want to experience The LUSSO Collection but who travel less than four weeks each year. LUSSO 21 provides an option to experience our multi-million dollar properties for 21 days out of the year. We know from history with the Group and Corporate Membership that once Members experience LUSSO they upgrade to our Unlimited membership option.

Q: Why are you capping membership in LUSSO 21 at 50 active Members?
A: We had this same limit when we offered the Group and Corporate Membership options, hence it was critical in repackaging that we did not change this feature.

Q: How does this differ from your ‘regular’ membership?
A: There are very few differences and we did that by design so that all members would be equal in terms of access and availability to the clubs properties. LUSSO Unlimited provides members with unlimited usage of our properties for a deposit of $425,000 and annual dues of $28,000. LUSSO 21 offers members 21 days in our properties for a deposit of $325,000 and annual dues of $21,000. Here is a grid outlining the two options:

LUSSO Unlimited
$425,000 deposit
$28,000 dues
Unlimited usage
4 standard reservations (on calendar at one time)
2 reservation advanced (on calendar at one time)
1 holiday priority week per year
2 gift weeks per year

LUSSO 21 (limited to 50 active memberships)
$325,000 deposit
$21,000 dues
21 days per year
2 standard reservations
1 reservation advanced (on calendar at one time)
1 holiday priority week per year
1 gift week per year

Q: Why did you add the new plan?
A: It is not a new plan but rather an enhancement to our current group plan which better fits the needs of our current members as well as our prospective members. Many have told us that they would prefer to purchase a fixed number of days because they don’t want to purchase something they may not use.

In addition, this offering appeals to a broader market and will enable more individuals to experience The LUSSO Collection and to see first-hand that it truly is the best option on the market when it comes to luxury travel destination clubs.

Q: Will this lower priced plan change the rate of property acquisition?
A: As we add new members under the LUSSO 21 plan, we will continue to add new properties in desired locations throughout the world. In fact, this will enable us to increase the pace at which we add new properties because we are confident this will appeal to our prospective members and therefore increase the number of individuals in The LUSSO Collection. All Members, no matter what option, are counted as a full Member. We will continue to hold our industry low Members-to-property ratio at 5.5-1.

Q: Will members in this new tier make it more difficult for me to book homes at prime travel times?
A: It will actually be easier to book homes at prime travel times because there will be decreased usage for LUSSO 21 Members who will have a limit of 21 days yet our Members-to property ratio continues to be 5.5-1.

Q: Will LUSSO 21 appeal to people with school-age kids and therefore reduce the availability of properties during holidays?
A: We will continue the same process for booking trips during holiday times we have used in the past, therefore LUSSO 21 does not increase the likelihood that there will be more travel focused on the holiday periods.

Q: How will this affect the members-to-property ratio and my availability to book properties?
A: Our estimates show that our overall occupancy will decline about 10 percent.

Q: Is this due to sales being slow or the impact of the current economy of getting members to sign up for the LUSSO Unlimited membership?
A: Actually, we had our strongest quarter in Q1 of this year. The LUSSO Collection has been incredibly successful and in an effort to remain successful we need to evolve to appeal to prospective members as well as to continue to provide our current members with an experience unlike any other on the market.

We are very confident in our business model we created but we also continue to evaluate and enhance our offerings to compete as well as exceed our members’ expectations. Many prospective members have told us they would join our club if there was an additional option beyond the unlimited membership. We have decided to respond to that request. We also are pleased to report that the majority of individuals who have joined The LUSSO Collection in a group or corporate membership have chosen to upgrade to the unlimited option once they’ve had the chance to fully experience the product.

Q: You have always touted your club as offering a level playing field – is that still the case?
A: Absolutely! The introduction of LUSSO 21 does nothing to change the level playing field, which is based on all of our members having the capacity to make reservations based on the same criteria. Nothing has changed except for repackaging our group and corporate package into one simple plan.

Q: Does this mean less money to buy your current standard of properties?
A: This will actually enable us to continue to add our same quality of properties at a faster pace in desired locations around the world. By better structuring and marketing our capped usage option, we will grow our Membership at a faster pace. We will still hold true to our 5.5:1 Members-to property ratio. More Members mean more properties.

Also, LUSSO 21 memberships are limited just as our previous Group and Corporate plans were. There is not a significant impact to our business plan.

Q: You have always positioned LUSSO as a unique boutique model different from competitors. Aren’t you now doing what all other clubs are doing?
A: The LUSSO Collection has always had a unique model that has enabled us to be a leader in the luxury destination travel club industry. All Members continue to enjoy the benefits of being part of a boutique club: Highly personalized service, unique amenities, spectacular, "cherry-picked" homes and best of all—unprecedented availability.

The introduction of LUSSO 21 will make us even stronger in the market because we are enhancing and simplifying our membership offerings and making it easier for prospective members to understand the choices. Most other clubs have many different plans and multiple levels that make it confusing and difficult for members to make a choice and to truly understand what the plans mean.

We are confident that when they do compare The LUSSO Collection to others we will continue to be the
best choice for people looking for a unique luxury travel destination option.

Q: How can you sustain your business model with these lower priced memberships?
A: LUSSO 21 represents the repackaging of our pre-existing Group Membership product. Our business plan & business models already accounted for the quantity and dollars represented by those that will purchase LUSSO 21 so we so no substantial change that will impact our business model.

Q: How do I know this isn’t the start of a lot of changes?
A: We will continue to grow and evolve The LUSSO Collection to make sure that we continue to deliver outstanding service to our members. We are committed to avoiding changes that go against our fundamental goal of providing our Members the best offering in the industry. We have always been very strategic in our business plan and part of that strategy is listening to the market and to both our current and prospective members. As the Club continues to grow and evolve we will continue to focus on new opportunities and listen to suggestions that will only enhance the Club for the benefit of our Members.

Q: How will you continue to sell the unlimited plan – won’t all people first join at this lower priced plan?
A: We are excited to sell both the LUSSO 21 and the LUSSO Unlimited plans and we are confident based on our past sales experience that there will be strong demand for both products.

Q: Doesn’t this prove your original plan was unsustainable?
A: LUSSO 21 represents the repackaging of our pre-existing Group Membership product. Our business plan & business models already accounted for the quantity and dollars represented by those that will purchase LUSSO 21 so economically, there is little change to our business plan as a result.

Q: Will members who purchase the new plan be able to purchase additional nights of usage?
A: We have structured LUSSO 21 so that members at this level will not be able to purchase additional nights. There is of course always the option for them to upgrade their Membership to LUSSO Unlimited.

TarheelTraveler

I think this change will help Lusso market to prospects. I personally didn't consider Lusso seriously, because I wanted less days. In the end, I liked my DC trips so much, I ended up bumping up the number of days (just as suggested is common in the Q&A).

The only question I have is if you reduce the cost, yet keep the member ratio the same (which decreases the utilitization), doesn't that adversely impact the financial model? The Q&A is not very clear on that point.

3DH

In theory, yes, but with this specific example, no... read on...

The original "group" and "corporate" plans each had initial fees of $531.250 and dues of $35,000 for 56 days of use. If two families joined the group plan, they would each pay a $265,625 fee and $17,500 dues for 28 days, but one stipulation of that plan was that there was only ONE holiday per "group", not per person, assuming there were 2 in the group.

The new plan offers 21 days of use (without having to find someone to split a membership) and a guaranteed holiday reservation each year via the rotation system as with unlimited memberships at $325k with $21k dues.

There will still be a cap on the number of these memberships sold -- as there was with the original other two... and each "21" plan will be treated as a whole membership with no fancy mathematical formulas required to assess ratios based on percentage of the unlimited members. Thus, the 5.5:1 ratio will remain the same, but will actually increase availability as most unlimited members travel far more than 21 days per year.

I am definitely in favor of the plan, as I see no downside to it... the ratios (including guaranteed holidays) will remain the same and more people will potentially be able to experience LUSSO membership -- given the lower price point. What's not to love?

__________________
"Boutique" is better! Another extremely satisfied LUSSO member!

Kagehitokiri

how many group/corp members are there right now?
is that a separate cap of 50?

Lusso Consolidates Membership Plans - SherpaReport
14 nights + 1 gift week
vs
unlimited including 2 gift weeks

TarheelTraveler

I definitely get the part of dividing the membership essentially in two, in order to bring in members who don't want to commit to as many days. Seems like a smart move to sign up more members. I was just surprised that those 21 plan members are counting as full members and the 5.5 ratio is not changing. Seems like less money to buy the same required number of houses. I guess the way to look at it is it's essentially an incentive applicable to a limited number of new memberships that's essentially been budgeted for based on the Q&A.

Veras Group Jim

I think this is a great addition to the LUSSO offerings.

My experience has been that members who have the opportunity to purchase smaller plans, often end up upgrading to higher usage plans that they would never have purchased initially. Fourteen night plans are great for this as well. I have seen quite a few members (more than 10, at least) who believe they will never use more than two weeks per year, who end up upgrading after a year or two of membership. Destination clubs are very addictive once your spouse or friends or kids start enjoying them!

I think it's a great move.

__________________
Jim Pippin
Co-Founder & Managing Partner
The Veras Group, LLC

Desties

Kudos for hopping on the Lusso bandwagon early, 3DH. I remember when the $325k price of the new limited plan was the entry price early last year of the unlimited plan.

3DH

...sadly, I had jumped on the ER bandwagon about that time, and missed out on that good of a deal!

__________________
"Boutique" is better! Another extremely satisfied LUSSO member!